That some members of Congress are farmers is hardly new. Many of the Founding Fathers worked the land. But as the industrial age transformed America’s agrarian society and technology made it possible for fewer farmers to grow more crops on more land, the number of lawmakers actively engaged in agriculture dropped sharply.

We don’t have a firm count of how many farmers are serving in the current Congress, but we do know, based on a recent analysis of the Environmental Working Group’s Farm Subsidy Database, that 23 of them, or their family members, signed up for taxpayer-funded farm subsidy payments between 1995 and 2009.

This would be a good place to point out that just five crops – corn, cotton, rice wheat and soybeans – account for 90 percent of all farm subsidies. Sixty-two percent of American farmers do not receive any direct payments from the federal farm subsidy system, and that group includes most livestock producers and fruit and vegetable growers.

Among the members of the 112th Congress who collect payments from USDA are six Democrats and 17 Republicans. The disparity between the parties is even greater in terms of dollar amounts: $489,856 went to Democrats, but more than 10 times as much, $5,334,565, to Republicans.

One reason for the disproportionate number of Republican lawmakers benefiting from farm subsidy programs is the current scarcity of rural Democrats in Congress – casualties of the Tea Party wave that swept into office in November of 2010. (This was despite the Democrats’ decision to bow to the wishes of the subsidy lobby by passing a status quo 2008 farm bill in a misguided bid to hang on to those seats.)

Several new members of Congress who won with tea party support have been less than eager to talk about farm subsidies ever since the news broke last year that they, or their families, personally benefit from those very taxpayer dollars.

EWG doesn’t believe that the payments to lawmakers are improper or illegal. But the fact that so many more Republicans in Congress receive so much more in farm subsidies than their Democratic colleagues does highlight the GOP’s controversial decision to spare those programs from the budget ax – even as it slashes funding for so many others. Consider:

•In January, David Rogers of Politico, and Phillip Brasher at the Des Moines Register, reported that the Republican Study Committee proposed to eliminate the meager federal funding for an organic food growers’ program without even mentioning the the possibility of cutting spending for entitlements that send checks out to largest producers of corn, cotton and other commodity crops – regardless of need.•Then last week (March 21), National Journal reported that the Republican-led House Agriculture Committee is backing cuts to the Supplemental Nutrition Assistance Program – previously known as food stamps – in the face of record enrollment levels triggered by high unemployment. But not even minimal reductions were proposed to the excessive payments to wealthy farms.The GOP-led support for subsidies also comes at a time when big commodity farms clearly don’t need taxpayer funding.

The farm sector is white-hot, and has generally fared extremely well as recession gripped the rest of the economy. Farm income and prices for commodity crops are soaring. In 2008, $210,000 was the average household income of farms that received at least $30,000 in government payments that year. But according to the House Agriculture Committee and the Republic Study Committee, payments to those farms should stay in place while the record 43 million Americans enrolled in SNAP – millions of whom are unemployed for the first time – face slashes in the help they get to put food on the table.

It’s important to note that two of the Republican senators who collect subsidies – Charles Grassley of Iowa and Richard Lugar of Indiana – have been long-time leaders in the effort to reform federal farm programs. Both have fought to right the gross inequity of sending 74 percent of taxpayer-funded payments to the largest and wealthiest 10 percent of farm operations and landlords. The top-heavy support for the biggest operations puts smaller family farms at a serious disadvantage and works against a more diverse and resilient food production system that could stand up against wild swings in weather or global markets – and provide Americans with a healthier food supply.

Of course, Democratic members of Congress have historically been subsidy recipients too, notably former House Agriculture Committee Chairman Charles Stenholm of Texas and former Senate Agriculture Chairwoman Blanche Lincoln of Arkansas.

Nor is the phenomenon of lawmakers receiving farm subsidies limited to the federal level. Recent media reports have shown that direct payments are even more common in state legislatures in Wyoming, Wisconsin, Montana, Idaho and South Dakota.

At EWG, we believe that farmers deserve a reasonable safety net to protect against damage from drought, storms and fickle markets. But the American public’s investment portfolio in agriculture needs to change. It’s indefensible to provide subsidies to well-off farmers and landowners, especially in the face of a booming farm economy and a federal budget squeeze. Meanwhile, farmers seeking modest federal support to protect water, land and wildlife are being turned away for lack of funds.

We’re also committed advocates for government transparency, and it’s deeply disturbing that the public’s ability to see who gets what from the federal farm subsidy system has been curtailed by the Obama administration. Under the Bush administration, the rules allowed the public to see through shell corporations and paper entities to identify the part owners of subsidized farms and show where the money ended up. The transparency pertained to lawmakers as well. For this analysis EWG was forced to resort to harvesting data from members’ disclosure forms. That was an arduous but ultimately worthwhile task when advocating for greater accountability and transparency, and it didn’t use to be necessary.

Some Congress members (or their families) collecting federal farm subsidies are major players in the annual farm subsidy drama, others have only bit parts in terms of the amount of subsidies they receive. Overall, the distribution of subsidies among members of Congress reflects the highly distorted distribution of farm subsidies among farmers and landlords in the United States – between 1995 and 2009, 10 percent of subsidy recipients collected 74 percent of all subsidies.

The current salary for rank-and-file members of the House and Senate is $174,000 per year, and members enjoy robust health benefits. But whether major or bit players, members of Congress who receive farm subsidies are part of a system that cries out for reform and poses stark choices between helping wealthy landowners or doing right by struggling farm and urban families and the environment.

Member of Congress who received big or small checks from the federal government include:

US HOUSE OF REPRESENTATIVES (in alphabetical order)

Rep. Robert Aderholt (R-Ala.)

Aderholt’s wife, Caroline Aderholt, is a 6.3% owner of McDonald Farms, which received a total of $3,059,878 in federal farm subsidies between 1995 and 2009. Additionally she received $338 directly from USDA in 2009.

EWG’s estimate of farm subsidies to Caroline Aderholt, using the percentage share information received by USDA, is $191,580.

Rep. Leonard Boswell (D-Iowa)

Boswell is listed as directly receiving a total of $16,235 in subsidies between 2001 and 2008.

Rep. John Campbell (R-Calif.)

Campbell is listed as a 1.5 percent owner of the Campbell/McNee Family Farm LLC, which received a total of $10,364 in federal farm subsidies between 2007 and 2009.

EWG’s estimate of the farm subsidy benefits Campbell received, based on the percentage share information submitted to USDA, is a total of $155 between 2007 and 2009.

Rep. Jim Costa (D-Calif.)

Costa is listed as a 50 percent owner of Lena E Costa Living Trust, which received $2,494 in federal farm subsidies.

EWG’s estimate of farm subsidy benefits Costa received, based on the percentage share information submitted to USDA, is a total of $1,247 between 2006 and 2007.

Rep. Blake Farenthold (R-Texas)

Farenthold received a total of $1,205 in farm subsidies directly from USDA between 1999 and 2005.

Rep. Stephen Fincher (R-Tenn.)

Fincher is listed as directly receiving a total of $114,519 from USDA between 1995 and 2009. Fincher’s farm, Stephen & Lynn Fincher Farms, is also listed in the EWG database as receiving a total of $3,254,324 between 1999 and 2009. Fincher and his wife Lynn are each 50 percent partners in that farm.

EWG’s estimate of the farm subsidy benefits Fincher and his wife received totaled $3,368,843 between 1995 and 2009.

Rep. Vicky Hartzler (R-Mo.)

Hartzler is listed in the EWG Farm Subsidy Database, but no subsidies were directly paid to her. Her husband, Lowell Hartzler, however, is listed as a 98 percent owner of Hartzler Farms, which received a total of $774,489 in farm subsidies between 1995 and 2009. His ownership percentage rose from 53 percent in the years up to 2005 to 98 percent in 2006.

EWG’s estimate of the farm subsidy benefits Lowell Hartzler received, based on the percentage share information (assumed to be 53 percent prior to 2006) supplied to USDA, totaled $469,292 between 1995 and 2009.

Rep. Rush Holt (D-NJ)

Holt is listed as a 10.5 percent owner of Froelich Land Trust No. 1, which received at total of $33,021 in farm subsidies between 1995 and 2008. Holt’s wife, Margaret Lancefield, is listed as a 25 percent owner of Lancefield Farm, which received a total of $23,478 in subsidies between 1996 and 2009.

EWG’s estimate of the farm subsidy benefits Holt received, using the percentage share information provided to USDA, is a total of $9,337 between 1995 and 2009.

Rep. Timothy Huelskamp (R-Kansas)

Huelskamp is listed as directly receiving $258 in 2002.

Rep. John Kline (R-Minn.)

Kline’s wife, Vicky Sheldon Kline, is listed as a 20 percent owner of Sheldon Family Farms LP, which received a total of $23,667 between 2000 and 2009.

EWG’s estimate of the farm subsidy benefits Ms. Klein received, based on the percentage share information supplied to USDA, is a total of $4,733 between 2000 and 2009.

Rep. Tom Latham (R-Iowa)

Latham is listed as part owner of four entities: 33 percent owner of Latham Seed Co., which received a total of $448,925 in farm subsidies between 1995 and 2003; 25 percent owner in Latham Hospital Farm, which received a total of $76,612 between 1995 and 2001; 25 percent owner in Latham Kanawha Farm, which received a total of $15,648 between 1995 and 2001; and 3 percent owner in DTB Farms LLC, which received a total of $472,018 between 2003 and 2009.

EWG’s estimate of farm subsidy benefits Latham received, based on the percentage share information submitted to USDA, is a total of $330,046 between 1995 and 2009.

Rep. Cynthia Lummis (R-Wyo.)

Lummis is listed as a 31.33 percent owner of Lummis Livestock, which received a total of $47,093 in farm subsidies in between 1996 and 2002. Lummis listed her ownership of Lummis Livestock in her 2009 financial disclosure form.

EWG’s estimate of the farm subsidy benefits Lummis received, based on the percentage share information submitted to USDA, is a total of $14,289 between 1996 and 2002. Rep. Randy Neugebauer (R-Texas)

Neugebauer is involved in two business entities. He owns 50 percent of Lubbock Land Company Five LTD, which received a total of $3,369 in farm subsidies between 1998 and 1999. He also owns 50 percent of Lubbock Land Company Two LTD, which received a total of $4,608 in farm subsidies in between 1998 and 1999. Neugebauer’s financial disclosure forms for 2009 do not list either company.

EWG’s estimate of farm subsidy benefits Neugubauer received, based on the percentage share information submitted to USDA, is a total of $3,989 between 1998 and 1999.

Rep. Kristi Noem (R-S.D.)

Noem is listed as having a 13.5 percent share in Racota Valley Ranch between 2000 and 2001 and a 16.9 percent share between 2002 and 2008. Racota Valley Ranch received a total of $3,058,152 in farm subsides between 1995 and 2008. Noem’s 2009 financial disclosure form listed her as a partner in Racota Valley Ranch.

EWG’s estimate of farm subsidy benefits Noem received, based on the percentage share information submitted to USDA, is $443,748.

Rep. Collin Peterson (D-Minn.)

Peterson is listed as receiving a total of $828 between 2005 and 2009.

Rep. Dennis Rehberg (R-Mont.)

Rehberg received a total of $7,971 directly from USDA between 1995 and 2002. Rehburg’s wife, Jan Rehberg, also received $51 directly from USDA in 2008. Jan Rehberg also has ownership in two entities that received payments. She has a 33 percent stake in Lenhardt Property LP, which received a total of $517 between 2006 and 2009. She also has a 5.6 percent stake in Teigen Land and Livestock Company, which received a total of $31,890 between 2002 and 2003.

EWG’s estimate of farm subsidy benefits Rehberg and his wife received, based on the percentage share information provided to USDA, is a total of $9,980 between 1995 and 2009.

Rep. Marlin Stutzman (R-Ind.)

Stutzman is listed as directly receiving a total of $179,370 in farm subsidies between 1997 and 2009.

Rep. Mac Thornberry (R-Texas)

Thornberry listed as William M. Thornberry, directly received a total of $4,306 in farm subsidies between 1995 and 1999. Thornberry is also a one-third owner of Thornberry Brothers, which received a total of $65,326 in farm subsidies between 1995 and 2009. His financial disclosure form in 2009 lists him as an owner in Thornberry Brothers Cattle.

EWG’s estimate of the farm subsidy benefits Thornberry received, based on the percentage share information provided to USDA, is a total of $26,081 between 1995 and 2009.

US SENATE (in alphabetical order)

Sen. Michael Bennet (D-Colo.)

Bennet’s wife, Susan Daggett, is listed in his 2010 financial disclosure forms as 5.5 percent owner of Daggett Farms LP and LMD Farms LP. Daggett Farms LP received a total of $258,916 in farm subsidies between 1995 and 2008. LMD Farms LP received a total of $102,291 between 2000 and 2009.

EWG’s estimate of farm subsidy benefits Daggett received, based on the percentage share information provided to USDA, is a total of $19,866 between 1995 and 2009.

Sen. Chuck Grassley (R-Iowa)

Grassley is listed as directly receiving a total of $263,635 in federal farm subsidies between 1995 and 2009.

Sen. Richard Lugar (R-Ind.)

Lugar is listed as a 9.39 percent owner of Lugar Stock Farm. His wife, Charlene Smeltzer Lugar, is listed as a 7.42 percent owner in Lugar Stock Farm. Lugar Stock Farm received a total of $158,892 in farm subsidies in between 1995 and 2009.

EWG’s estimate of the farm subsidy benefits Lugar and his wife received totals $26,710 between 1995 and 2009

Sen. Jon Tester (D-Mont.)

Tester received a total of $159,549 directly from USDA between 1995 and 2009. Testers’ wife, Sharla, is listed as a 50 percent owner of T-Bone Farms – Tester is listed as owning the other 50 percent. T-Bone farms received a total of $282,754 in federal farm subsidies between 1995 and 2009.

EWG’s estimate of the farm subsidy benefits Tester and his wife received, based on percentage share information provided to USDA, is a total of $442,303 between 1995 and 2009.

Sen. Orrin Hatch (R-Utah)

EWG’S estimate of the farm subsidy benefits Hatch and his wife received, based on the share information provided to USDA regarding Ms. Hatch’s share of Edries N Hansen Properties LLC, is a total of $909 between 2008 and 2009.

—

Although Rep. Michelle Bachmann (R-Minn.) was the subject of considerable publicity in 2010 over her family’s farm subsidy payments, she is not in this list since she has not received direct payments from USDA. Her late father-in-law, Paul Bachmann, received $259,332 in subsidies between1995 and 2008. Bachmann’s financial disclosure form lists an interest in Bachmann Family Farm LP, receiving subsidy payments income in the $15,001-$50,000 range in 2009, but for unknown reasons, Bachmann Family Farm LP does not appear in the EWG Farm Subsidy Database. If a person is a part owner in a farm, and that farm receives federal subsidies, USDA indicates that that person is a beneficiary of federal farm programs.

Where is the media on this? We are being lied to. Tax breaks too? Bamster wants to talk about corporate fleecing?

***Kerry PicketPublished on March 31, 2011Obama has some 'splaining to do about taxpayers' profitable "investment" in General Motors. It turns out the president is imagining things.

Though Democrats tout the auto bailout as a success, recent reports illustrate the taxpayer cost of the GM auto bailout was substantially larger than the Obama administration and a Congressional Oversight report has owned up to.

"American taxpayers are now positioned to recover more than my administration invested in GM,” President Obama said, according to a piece in USA Today last November. Steven Rattner, former head of the Treasury's auto task force agreed, telling CNN in November: “Recent progress at GM gives reason for optimism that it may be possible for taxpayers to get every penny back.”

In fact, Investor's Business Daily reported that even the White House’s Director of the National Economic Council remarked that the Treasury Department Department had a good chance in "recovering most, if not all, of its investment in" GM.

However, a March 16 Congressional Oversight report, tells a different story. It estimates taxpayers will be out of $25 billion. Additionally, the report points out that “full repayment will not be possible unless the government is able to sell its remaining shares at a far higher price.”

That's only the beginning. Both the White House and the Congressional Oversight report omit the fact that during its bankruptcy, GM got a $45 billion tax break, courtesy of the American people.

GM is driving “away from its U.S.-government-financed restructuring with a final gift in its trunk: a tax break that could be worth as much as $45 billion,” reported The Wall Street Journal last November.

Over one year after the promises President Obama and his administration made about the auto bailout, a February piece on AutoBlog also confirms that GM will also get a $14 billion dollar domestic tax break:

GM will be able to skip its tax tab due to years of massive losses. Companies are typically forgiven a portion of future taxes due to their past losses, but that benefit is typically stripped after an organization goes through bankruptcy.However, the Obama administration and its allies presently continue to celebrate the success of the auto bailout, regardless of the facts. "I don’t think there’s any doubt that this was a success," said (H/T Detroit News) acting assistant secretary at the Treasury Department Tim Massad, who oversees the TARP program at Treasury, to a House panel on Wednesday.

In Obama's world, success mean taxpayers only lost as much as $84 billion.***

re. Govt Motors, Where is the mainstream media? AWOL. A combination of a) the fact that the tax system and the political goodies are too complex for them, b) they are so naive and untrained on all matters relating to business, and c) bias - make it so they honestly don't know or want to know that $84 billion of taxpayer money was lost. They were scooped by the Washington Times http://www.washingtontimes.com/blog/watercooler/2011/mar/31/barack-obama-losing-84-billion-big-success/ with not even a thought of racing to catch up with the story.

re. Ag Subsidies to members of commerce: On the positive side, this should make it easier for them to cancel the programs and explain to their constituents that they personally had to give this up too. As the article states, this has to do with geography. The heartland is now Republican but the farm subsidies go back to when Dems controlled much of it. Also as pointed out, ag is now big business, not family farms. These members are typically owning smaller shares of large tracts under professional management. Failure to apply for and secure subsidies that are widely available would be dereliction of duty by professional management.

People like Michele Bachmann get into the story, but all it looks she did was inherit through marriage a piece of something from her husband's family. She is a tax attornet. She didn't make a career inventing or promoting government subsidy programs, though she may have votes recorded on the wrong side of this. Pawlenty has past support of ethanol he needs to fix. Schumer supported the wall street bankers. Everyone has baggage. Bachmann isn't going to be President and she isn't going to lose her seat in Minnesota's most conservative district.

Reforms need to be comprehensive. If you tell one constituency or industry their program is canceled, you better to be able to also tell them all the others were too, otherwise it is just a vote against farming. Ag reform alone will lose those seats and skew the primaries.

Of Space Ships and Bullet TrainsThe space shuttle program is a cautionary tale for ambitious infrastructure projects.6 April 2011With the final landing of the space shuttle Discovery on March 9, a significant chapter in NASA history came to a close. It’s the beginning of the end for the space shuttle program—the final flights of Endeavour and Atlantis are scheduled for later this year—and thus a fitting occasion to reflect on an effort that dates back to the Nixon administration. As President Obama calls for a new era of “doing big things”—from creating a high-speed rail system to building wind farms—the record of the shuttle program and other “megaprojects” worldwide suggests a simple warning: beware the “unbiased expert.”

Commenting from Kennedy Space Center before Discovery’s final launch, PBS Newshour’s Miles O’Brien gave an unsentimental valediction for the shuttle program: “Well, the promise of the space shuttle program, when you look at how they were selling it in the front of Congress, was just pure fancy. There were all these studies which indicated the space shuttle fleet could be flown on the order of once a week, and that it would have airliner-like capability for turning it around once it got on the ground. But it’s an incredibly complicated system. And there wasn’t a full appreciation at the time for really how difficult it was to fly a reusable spacecraft to and from space.” O’Brien’s skepticism has become more common since the October 2003 release of NASA’s final report on the Columbia disaster. Investigating the causes of Columbia’s tragic disintegration over Texas on February 3, 2003, the Columbia Accident Investigation Board looked beyond the event itself, concluding that the accident’s origins could be found three decades earlier, in the program’s first days: “It is the Board’s view that, in retrospect, the increased complexity of a shuttle designed to be all things to all people created inherently greater risks than if more realistic technical goals had been set at the start. . . . Throughout the history of the program, a gap has persisted between the rhetoric NASA has used to market the Space Shuttle and operational reality.”

During the Columbia investigation, Robert F. Thompson, the shuttle program’s manager from 1970 until just after its first launch in 1981, officially confirmed what many had long suspected: that from their first discussions with Nixon aides, NASA engineers and other interested parties had fudged budget and performance numbers. To gain congressional support for the multibillion-dollar project, NASA had to demonstrate that the shuttle would have a much lower cost “per payload pound” than conventional single-use rockets. As Thompson recounted in his testimony before the Columbia Accident Investigation Board on April 23, 2003: “At the time that we were selling the program [emphasis added] at the start of Phase B, the people in Washington got a company called Mathematica to come in and do an analysis of operating costs. Mathematica discovered that the more you flew, the cheaper it got per flight. Fabulous. . . . So they added as many flights as they could. They got up to 40 or 50 flights a year. Hell, anyone reasonable knew you weren’t going to fly 50 times a year.”

Not everyone was fooled. Even before the shuttle’s first launch, in a prophetically titled cover story—BEAM ME OUT OF THIS DEATH TRAP, SCOTTY—for the Washington Monthly in 1980, Gregg Easterbrook compared the project with Howard Hughes’s “Spruce Goose,” the largest plane ever built, which managed to get only 70 feet off the ground in its sole flight. The magazine dubbed the shuttle program “Battlestar Bureauctica.”

Investigating an agency that had already overspent its original budget and missed its forecasted launch date, Easterbrook found scientists seemingly disconnected from any sense of financial stewardship. Recalling the program’s quest for cash in its early days, Jerry Gray, one of the original members of the shuttle technical team, used an equine metaphor: “First you have to get the horse,” he told Easterbrook, “then you decide where to ride him.” By 1980 the shuttle program had practically doubled its original budget; today, after three decades and almost $200 billion spent, it has missed almost every budget and performance goal.

Yet the shuttle program is just another entry in the ever-expanding file of large, ostensibly public projects that have lurched past deadlines and beyond financial limits. In their book Megaprojects and Risk: An Anatomy of Ambition, European planning and policy professors Bent Flyvbjerg, Nils Bruzelius, and Werner Rothengatter analyze dozens of public-works projects worldwide—from the “Chunnel” (the British Channel rail tunnel) to a high-speed rail project connecting Berlin and Hamburg to the construction of Denver International Airport. They draw some common lessons.

First, cost overruns are endemic to such massive projects. From the Chunnel, which nearly went bankrupt several times and exceeded original cost estimates by 80 percent, to Boston’s “Big Dig” traffic tunnel upgrade, which ran 200 percent over budget, the impact on state and local coffers can be immense. Overall, the authors report that “the difference between actual and estimated investment cost is often 50-100 percent.”

A second common thread in these ventures is that their advocates, eager to get them financed, vastly overstate projected public usage. Interestingly, this seems especially true of rail systems (both high-speed and standard urban rail) in comparison with road, bridge, and tunnel projects. While road infrastructure projects like the UK’s Humber Bridge (which has seen just 25 percent of its forecast traffic) have underperformed, public rail projects have an especially poor track record when measured against original cost and usage estimates. Transportation secretary Ray LaHood, pushing ahead with a White House plan to build high-speed rail throughout the country, is either unaware of this research or unconvinced by it.

The Megaprojects authors find that blame for these fiascoes lies in a toxic pro-project mix of self-seeking “experts,” politicians, and private-sector interests—combined with a minimum of public input. “It is easy to find motives for producing deceptive forecasts of costs and benefits,” they write. “Politicians may have a ‘monument complex,’ engineers like to build things, and local officials sometimes have the mentality of empire-builders. In addition, when a project goes forward, it creates work for engineers and construction firms, and many stakeholders make money.” So while some might defend the errors as honest mistakes caused by unforeseen circumstances, the authors come to a more prosaic conclusion: “The use of deception and lying as tactics aimed at getting projects started appears to best explain why costs are highly and systematically underestimated and benefits overestimated in transport and infrastructure projects.”

The authors’ solution to the seemingly intractable problems of complex project construction is fairly straightforward: give taxpayers a say. They call for a “participatory and deliberative approach in including publics and stakeholders,” which they argue will result in “decisions about risk that are better informed and more democratic.” Encouragingly, more inclusive practices of this kind seem increasingly common around the world. From “citizen juries” and “public advisory councils” that oversee local- development efforts in Europe and the United States to Stanford professor Jim Fishkin’s “Deliberative Poll” methodology, which has been employed to plan public-construction projects in China, citizens can and should take a larger role in decision-making. Greater public participation will not only result in scuttling some unnecessary projects, but also prioritizing more urgent ones. As Flyvbjerg and his colleagues note, some meritorious projects never see the light of day because they lack the salesmanship and boosterism that have often supported expensive boondoggles.

During World War I, French prime minister Georges Clemenceau famously sniffed that “war is too important to be left to the military.” In the same sense, as President Obama declares that “within 25 years, our goal is to give 80 percent of Americans access to high speed rail,” citizens should understand that such efforts are too important—and costly—to be left to engineers, politicians, and even rocket scientists.

Pete Peterson is executive director of the Davenport Institute for Public Engagement and Civic Leadership at Pepperdine’s School of Public Policy.

Not the Biggest Cut in History. Not by a Long Shot. David Boaz - April 11, 2011

Pundits and politicians are all in agreement: Those were some big budget cuts in Friday night’s deal. “The largest annual spending cut in our history,” President Obama said. Speaker of the House John Boehner called it the “largest real dollar spending cut in American history.” Saturday’s front-page, upper-right headline in the Washington Post proclaimed:

BIGGEST CUTSIN U.S. HISTORY

The story went on to say that Obama “said the cuts would be painful but necessary.”

an ascendant Republican Party has managed to impose its small-government agenda on a town still largely controlled by Democrats.

And in a separate story:

Obama and his party felt pressure to show they heard the message that many Americans believe the government spends too much and that deficits are unsustainable.

AP added:

Republican conservatives were the chief winners in the budget deal that forced Democrats to accept historic spending cuts they strongly opposed. Emboldened by last fall’s election victories, fiscal conservatives have changed the debate in Washington. The question no longer is whether to cut spending, but how deeply.

Please. It’s a cut of $38 billion in a budget of $3,819 billion. That’s 1 percent. That’s a rounding error in federal budgeting.

Have you ever seen people so self-congratulatory over such a minor accomplishment? Here’s one graphic representation of the budget cuts—showing the House’s original proposed cut of $61 billion—compared to annual spending and the annual deficit. Here’s another, depicting the $61 billion cut in the context of the rapid growth of spending over the past decade. In fiscal year 2001, which ended in September 2001 but was mostly set in place before President Bush took office, the federal government spent $1,863 billion. After seven years of Bush and a Republican Congress, spending was more than a trillion dollars higher—$2,983 billion in FY2008. Then the financial crisis, TARP, the stimulus, and the omnibus spending bill came along, and FY2011 spending is estimated at $3,819 billion—$836 billion more than just three years earlier, and $1,956 billion more than when Bush took office a decade ago.

So this cut—not of $61 billion but of $38 billion—is a lot of money anywhere except Washington. In Washington, it’s 1 percent of what the federal government will spend this year. It’s less than 5 percent of the three-year spending increase. It’s 10 percent of this year’s spending increase, the increase from 2010 to 2011.

Is it nevertheless the “the largest annual spending cut in our history,” as President Obama says? Not hardly. My Cato Institute colleague Chris Edwards notes:

This federal budget table shows total federal spending since 1901. Total spending fell in 22 years out of the last 110 years. In 19 of those 22 years, spending was cut by more than 1 percent.

And what about the downsizing of the federal government after World War II? That same budget table shows that federal spending fell from $92.7 billion in 1945 to $55.2 billion in 1946, to $34.5 billion in 1947, and to $29.8 billion in 1948 (and all without any of the job losses that we’re told would result from modest reductions today). Check out also the drop in spending from 1919 to 1922, even larger in percentage terms.

The president might be technically correct in this sense: In none of those years did federal spending fall by as much as $38 billion in nominal dollars. But any real comparison would use inflation-adjusted dollars or percentage of the budget, and by those standards there are no “big, big cuts” here. (Boehner specifically called it the “largest real [that is, inflation-adjusted] dollar spending cut in American history,” which is so clearly wrong that it must surely have been a misstatement.)

The fundamental point here is that federal spending rose by more than a trillion dollars during Bush’s first seven years, and then by almost another trillion in barely three fiscal years. And then we had a titanic battle over whether to trim $38 billion.

The idea that the Democrats “have shown that they heard the message that government spends too much” or that the Republicans—the party that increased federal spending by a trillion dollars while nobody was looking during the Bush years—have “imposed a small-government agenda on Washington” is ludicrous. After these meager cuts, the federal government will spend more than twice as much as it did when Bill Clinton left the White House.

Our present fiscal course is unsustainable, as experts across the political spectrum have told us. Projections in the 2010 Financial Report of the U.S. Government indicate that national debt as a percentage of GDP is on course to rise from 62 percent of GDP in 2010 to 130 percent in 2040. If there’s this much resistance to a budget haircut, how can we hope to agree on surgery that would actually reduce spending, balance the budget, and avert national bankruptcy?

Stiglitz and the progressive OuroborosApr 11th 2011, 21:30 by W.W. | IOWA CITY

JOSEPH STIGLITZ, an economics professor at Columbia University with a Nobel prize and stints at the White House and the World Bank on his gold-encrusted CV, takes to the perfumed pages of Vanity Fair to decry the alleged rule "Of the 1%, by the 1%, for the 1%". Mr Stiglitz's essay, though riddled with error and confusion, remains an illuminating encapsulation of a certain misguided conception of political economy common on the left.

Scott Winship does us the service of ferreting out Mr Stiglitz's false and misleading claims. The share of national income and wealth accruing to the top 1% has not grown as much as Mr Stiglitz asserts. Median income has declined only if one omits the value of health benefits. The claim that "All the growth in recent decades—and more—has gone to those at the top", is plainly incorrect. There is little evidence that increasing levels of inequality "undermine the efficiency of the economy". Mr Stiglitz maintains that it is "well-documented" that high levels of inequality lead "people outside the top 1 percent" to "increasingly live beyond their means", but the increase in indebtedness is small, and theories, such as Robert Frank's, connecting middle-class consumption and indebtedness to rising inequality remain speculative. There's more, but fact-checking is tedious business. Please do read Mr Winship's post for the details.

I'm more interested in the deep commitments framing Mr Stiglitz's essay. Mr Stiglitz offers yet another voicing of the progressive master narrative: that economic inequality becomes political inequality, empowering the richest to bend the political process to their will at the expence of the commonweal. "Wealth begets power, which begets more wealth", as Mr Stiglitz pithily puts it. Progressives thrill to this sort of vague slogan, but we are rarely offered an intelligible explanation of how exactly wealth begets power, nor are we offered an intelligible approach to reducing the power of wealth over policy and politics.

Mr Stiglitz writes:

Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.I agree with all of this. But, pray tell, what does it have to do with inequality? Would reducing inequality to, say, Canadian levels by means of progressive redistribution help? No, it would not. Making rich people poorer and poor people richer won't strip the financial industry of the resources needed to "buy" the regulations and regulators it wants. So what does Mr Stiglitz propose we do? He doesn't say, but I'll hazard a guess: get better regulators—regulators who see things Joe Stiglitz's way. If you sense that this is not a serious answer to a serious problem, you are correct. Indeed, it is plausible that economic technocrats such as Mr Stiglitz bear no small part of the blame for the corrupt and baleful state of the financial economy.

As Gabriel Sherman writes in a new New York Magazine article on Peter Orszag and the revolving door between Washington and Wall Street, "The close alliance among Wall Street and the economics departments of the major universities and the West Wing of the White House is the military-industrial complex of our time." Not to say that the military-industrial complex is not the military-industrial complex of our times, nor that the confluence of government and health care is not the military-industrial complex of our times. The problem is that we are multiplying military-industrial complexes. But this explosion in public-private "partnerships", and the inevitable political corruption and economic distortion they produce, is not at bottom due to a plot of the top 1%. It is due in no small part to the success of progressive ideologues like Mr Stiglitz in arguing for ever greater government control over everything.

A political system that enshrines governments' power to grant monopolies and other barriers to economic competition, whether they be direct subsidies to government's chosen champion firms, or less direct subsidies by way of taxes, tariffs, and regulations that disproportionately harm less-favoured firms, inevitably attracts money to politics. Under close inspection, the progressive master narrative is revealed as a tail-chasing, self-consuming progressive Ouroboros. It is an argument against money in politics that argues for precisely the sort of government power that draws money to politics.

The progressive master narrative runs on the fuel of class interest, but it makes an arbitrary exception for members of the progressive technocratic elite, like Mr Stiglitz. This is the loophole through which the Ouroboros escapes self-cannibalism. These men and women, the technocratic elite, in virtue of their superior moral rectitude and mastery of the relevant social science may be trusted with almost unlimited power to manage the nation's economy, wars, and far-flung imperial holdings on behalf of the democratic public. Sure, these godlike king-making powers make professional courtiers of the money men, but not to worry. The public-minded technocrat pledges in his heart of hearts to express only the will of the people, especially the least among us. Thus our Joe Stiglitzes and Samantha Powerses, desiring nothing but the best all of us, stand arm in arm as a sturdy bulwark against the tide of money that threatens to corrupt our politics. Of course, at times the wishes of the people diverge from the opinion of the technocrats. In which case, we cannot but suspect that public opinion has been manipulated by the rich, or by "market fundamentalist" ideologues financed by rich people, such that, as Mr Stiglitz puts it "one big part of the reason we have so much inequality is that the top 1 percent want it that way". If the financial system collapses and cripples the economy, if the American military gets bogged down in a blood-soaked trillion-dollar quagmire, that's because the technocrats in or near positions of power had too little influence, not too much. Or they were the wrong technocrats. Or, if all this seems too far-fetched ... Look! Over there! Inequality!

The nexus of politics and big money is a profound problem, but inequality is at best a manifestation of the problem, not the problem. Inequality is a red herring that draws our attention away from the real, hard task that faces truly public-spirited reformers: how to fix the corrupt and corrupting interface between America's economic and political institutions. We may hope for, but should not expect, useful, impartial advice in this regard from powerful academics holding golden key-cards to the revolving door. And we may hope for, but should not expect, useful advice in this regard from progressives dizzy from chasing their tails. So, instead, we get righteous rants about the injustice and danger of inequality. But should the American public suddenly sweeten to the idea of greater downward redistribution, sending America's Gini coefficient tumbling toward the sweet valley of social justice, it would do little or nothing to alter the venal incentives that account for the multiplying host of military-industrial complexes spreading across America like a cancer.

"The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of the public moneys." --Thomas Jefferson, letter to Shelton Gilliam, 1808

Half the population pays no Federal taxes? I have people left and right claiming disability, all entitled to retire at 50 or 60. All the while Katherine and I stalked. Had someone in my yard a few days ago looking at a small water problem then get a solicit text a few minutes later from out of state telling me they can help me if I have any flooding problems. Done by those robbing us just to torture us and remind me they are watching. Not a thing I can do about it. Not a thing law enforcement will do about it. Even if they tried they would be bribed. (Hey you want back stage passes to see Toby Keith or Trace Adkins?). I see people singing her stolen lyrics standing right up there with President, President candidates. Claiming how nice they are for the troops, children etc.

I just got my tax bill. I work probably close to half the year to pay taxes have little left over to pay bills and then read this:

By Beth DeFalco New Jersey spent more than $3 million this fiscal year on clothing allowances for white-collar workers who aren't required to wear uniforms, according to a new report from the state comptroller.

Under collective bargaining agreements, New Jersey provides an annual clothing allowance for uniforms to certain employees of $700 a year for full-time workers and $350 for part-time workers. The allowance is a flat amount included in payroll checks and doesn't require that employees provide a receipt.

Overall, the state spends more than $22 million a year on clothing allowances, with more than 20 percent going to white-collar workers, such as day care counselors, computer technicians and teaching assistants. About half of them don't wear uniforms, the report said.

"It's absurd," said state comptroller Matthew Boxer. "The state spends millions of dollars every year to cover the cost of uniforms for state employees who don't actually wear uniforms."

advertisement The report said that interviews with administrators at five different New Jersey state departments showed allowances were provided to department employees who are not required to wear uniforms or special clothing.

In one example, 888 white-collar Transportation Department employees received the allowances in the 2011 fiscal year, yet only 49 were required to wear uniforms.

Boxer's office has recommended that the state eliminate the clothing payments for employees who are not required to wear uniforms or other identifiable clothing, but did not recommend whether that be done through legislation or collective bargaining.

According to Boxer's office, New Jersey's clothing allowance is far more generous than other states. New York, Pennsylvania, Ohio, Michigan, Maryland, Connecticut and California don't provide clothing allowances greater than $175, according to collective bargaining agreements, and California will reimburse its employees up to $450 a year if the employee shows a receipt.

Boxer's office said the investigation was the result of an anonymous call made to a tip line.****

In his speech this afternoon, President Obama is expected to call for, among other things, an increase in taxes on investors, entrepreneurs, small business owners, and other “rich” people who make over $250,000 a year. The goal, the President claims, is to reduce deficits.

America has a spending problem, not a revenue problem, as the Congressional Budget Office chart below shows. The federal budget has ballooned nearly $2 trillion in the past 10 years and that increased burden of spending is undermining growth. And if left on autopilot, the spending crisis will get worse in coming decades. Rather than trying to keep up with that growing burden of government — an impossible task — by raising taxes, our leaders should be looking at ways to treat the underlying problem: Our government is too big and it spends too much. We cannot tax our way out of this problem, particularly since politicians will spend any additional revenue.

The federal tax burden will rise above the historical average of 18 percent of GDP with no help from President Obama. Even without expiration of the Bush tax cuts or the alternative minimum tax, the tax burden is expected to climb because even modest economic growth slowly but surely pushes more and more people into higher tax brackets.

The chart below shows CBO’s estimate of personal income tax revenue based on current policy (as opposed to estimates based on current law, which includes already legislated tax hikes) . To be more specific, it shows how much revenue the government will collect from the individual income tax even if the 2001 and 2003 tax cuts are made permanent and the AMT is indexed.

The aggregate individual income tax burden will increase by roughly 5 percentage points of GDP when compared to the long-run average of about 8 percent of GDP (the CBO estimate only goes to 2035, so I extrapolated to show the same time period as the first chart). And remember, this is the forecast of what will happen to income tax revenues even if politicians don’t impose any new laws to coercively extract more revenue.

This might not be too bad if other taxes were falling, but that’s not what CBO is projecting. As such, this big increase in revenue from the individual income tax means that the overall tax burden will climb by approximately the same amount.

In other words, revenue likely will rise close to 25 percent of GDP as we approach the next century. So if we use this more realistic baseline, we can say that more than 100 percent of the long-run deficit problem is because spending is out of control.

The second reason for a firm no-tax increase position is that higher taxes are a very ineffective way of reducing budget deficits. Indeed, tax increases generally backfire and lead to more red ink. To understand why, it’s important to put away the calculator and instead consider the real world of politics and public policy. For instance:

Tax increases rarely raise as much revenue as predicted by government forecasters. This is because of “Laffer Curve” effects , as taxpayers change their behavior to earn less income and/or report less income. Simply stated, people respond to incentives, and this means taxable income falls as tax rates increase.

o Tax increases erode pressure to control spending. Why would politicians want to make tough decisions and upset special interest groups, after all, when there is going to be more revenue (or at least the expectation of more revenue)? Using more colloquial language, trying to control spending with higher taxes is like trying to cure alcoholics by giving them keys to a liquor store.

o Milton Friedman was right when he said that, “In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with.” In other words, if politicians think they can get away with deficits averaging, say, 5 percent of GDP in the long run, then the the only impact of higher taxes is an equal amount of additional spending – while still retaining deficits of 5 percent of GDP.

The real-world evidence certainly points in this direction. We’ve seen “bipartisan budget summits” several times in Washington, and the result is more spending rather than lower deficits.

America’s fiscal challenge is too much spending. Government is too big and it is wasting too much money. Taking more money from the American people is not the way to solve that problem.

"if we can only get some decent mouthpieces to convince just enough of the 50% who pay no Fed income tax to go along with this"

You appeal to them through their children, not through their current status, the key is income mobility. In the inner city some people grow up believing we are welfare, we will always be welfare people. You never win their vote unless they change their outlook. Turns out the party of welfare didn't have much of a solution for them either. With the few Hispanic immigrants for example that I have gotten to know, they are beaming with pride in their children. You need to ask them if their children will likely be pulling the wagon or riding on it. Will they be producers or dependents of all this mess that won't even be there for them anyway if we keep going like this. It was free money only as long as somebody else paid for it. No one is paying for it all now. This is not free money for you if your own children and grandchildren are the ones left holding the tab.

There is an optimism (missing) that goes with getting this country going again. Conversely there needs to be a shame put on accepting the status quo and letting everything we believed in and worked for go down the drain on our watch.

I had occasion to be in a California Board of Equalization office today (this is CA's IRS). Lots of purple on the walls and some purple SEIU shirts to be seen. Naturally I was wearing my "Nobama: Keep the change!" t-shirt

I must say that I was pleasantly shocked at being taken quickly, and treated with considerable humanity by the bureaucrat in question. She definitely let me slide on something that could have been a big inconvenience, and trusted me to phone in to her information that I did not have with me.

With business concluded, she politely queried about my shirt. I commented that BO IMHO was a nice man but was bankrupting us. She answered that he came in at a tough time, when anyone taking office would not have looked good. I allowed that that had merit and we continued the conversation. Naturally, I beat her up with simple facts, which I made sure to do in a nice and respectful way. It was a nice conversation and ended well, in a positive spirit. I had the impression that I had given her some things to think about.

One point of a document as subversive as Paul Ryan's 2012 budget is to provoke debate, and has it ever. But amid the thoughtful musings about starving orphans and grandma in a snowbank, could his critics at least get their facts right?

Let's unpack the distortions.

• Deficits and debt. Perhaps the most bizarre complaint is that Mr. Ryan's blueprint would worsen the U.S. fiscal imbalance compared to current law. So the House Budget Chairman has proposed supposedly hideous cuts to popular entitlements at great political risk for . . . the fun of it?

Federal deficits have increased 259% over the last three years and the Ryan budget starts to repair the damage. It would bring next year's deficit below $1 trillion, down from estimates of roughly $1.6 trillion for 2011. The false claim that Mr. Ryan would increase deficits and debt seems to be based on a Congressional Budget Office baseline that assumes $4 trillion in new taxes will land after 2012 with the expiration of all the Bush-era tax rates, that the Alternative Minimum Tax will apply to the middle class, and that Medicare physician payments will fall 20% next year.

No one thinks that baseline is at all realistic, least of all President Obama, so the right comparison is with Mr. Obama's 2012 budget. Mr. Ryan proposes smaller deficits for the next 10 years, falling to 1.6% of GDP in 2021 versus 4.9% for the White House. According to CBO, debt held by the public falls to 67.5% of the economy a decade from now from about 69% today, while it rises to 87.4% in Mr. Obama's version.

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Bloomberg News

Wisconsin Rep. Paul Ryan during a news conference on the House Republican budget..• Tax cuts for "the rich." The Ryan budget outline by design does not provide many tax specifics, aside from an instruction to the Ways and Means Committee to propose a reform plan that would swap lower rates for fewer loopholes and special exclusions. This overhaul is not even a net tax cut—the instructions are to design a reform that is revenue neutral. It would hold tax receipts to their post-World War II average of between 18% to 19% as a share of the economy.

The liberal claim that this means a tax cut for the wealthy is based entirely on the fact that marginal tax rates would decline, even though the loopholes primarily benefit higher-income taxpayers. At any rate, Mr. Obama's own deficit commission also favored lowering the rates and broadening the base for a more efficient and competitive tax code.

• Medicare "cuts." The Mediscare machinery is grinding into gear, and the same people who say Mr. Ryan is imposing too much pain on seniors by requiring them to pay a larger portion of their health costs also claim that he's a coward for exempting everyone in or near retirement. In other words, the soup is terrible and the portions are too small.

Mr. Ryan's plan, known as premium support, would gradually bring down health costs and spending, but it's a "cut" only in the sense of slowing the rate of growth. The premium support subsidy—for seniors to choose from a list of regulated private health plans—would start at $15,000 a year and increase annually. It is also means-tested to provide more help for lower-income seniors.

• Real health-care reform. The best way to think about Mr. Ryan's plan is that it offers the true health-care reform that Mr. Obama promised but which vanished in the political drive to put 30 million more Americans on the government rolls. Economists from the center-left to center-right have been recommending premium support for decades, and it was first proposed by Stanford's Alain Enthoven in the New England Journal of Medicine in 1978.

Some version has since been endorsed by everyone from President Clinton's 1999 Medicare commission, chaired by Democrat John Breaux, to Bob Dole and Tom Daschle in 2009. Another iteration was floated this week by a group of Nobel laureates including Ned Phelps, Vernon Smith and George Akerlof.

The core economic distortion in the current health market is that consumers rarely have the incentive to seek the best value for their money. By capping the Medicare subsidy, seniors would pay for the marginal costs of their care, promoting competitive insurance. That would in turn incrementally change how doctors and hospitals provide care, encouraging competition in price and quality.

• Health-care inflation. Aha, retort the critics, Mr. Ryan would only increase Medicare premium support based on the rate of overall inflation, while health costs are growing far faster. This is true, and we can debate whether the annual increase should be indexed to GDP growth or something else.

But the key point is that premium support would reduce health costs over time by changing the incentives of the health market. MIT economist Amy Finkelstein's research suggests that Medicare's 1965 creation led to market-wide changes that explain about half of the increase in real per capita health spending between 1950 and 1990. Mr. Ryan's plan would be as consequential in reverse.

***These attacks amount to false fronts for the real objection, which is over the role of government. Mr. Ryan's critics understand very well that he wants to substitute markets for bureaucratic central planning. What he would dismantle isn't Medicare, but its system of one-size-fits-all coverage and price controls. The liberal answer to runaway costs, passed as part of ObamaCare, is the Independent Payment Advisory Board that will decide how much the government will pay for what treatments and was deliberately shielded from Congressional supervision.

Medicare "as we know it" will change because it must. The only issue is how. Mr. Ryan is offering Americans a reform rooted in consumer choice and private competition, rather than political control and bureaucratic rationing. This is why he is under such ferocious liberal assault.

Programs that are popular on PBS will survive fine without subsidy. Also for Planned Parenthood, if its cause is so noble and it needs only a thousandth of what tax rates 'cost' it could easily solicit left wing, free will support from just the leftist rich keeping too much of their own money. What kind of religion are we establishing BTW by forcing the support of these practices, killing the unborn by the millions, onto the half of the populace who abhor that practice?

The '$70 billion cost' of tax cuts coincided with revenue SURGES that closed the deficits to one tenth of what they are now. (That is the opposite of a 'cost'.) Growth stopped when the opposing agenda took power in Washington.

By the end of his little chalk talk, he had it down to the 'cuts that the GOP are trying to make'. FYI, the GOP people are not trying to make cuts, they are trying to balance things and make our government and society healthy and sustainable which cannot happen without economic growth. The status quo he advocates (higher taxes) precludes growth and thus precludes sustainability.

World finance leaders Saturday chastised the United States for not doing enough to shrink its massive overspending and warned that budget strainsin rich nations threaten the global recovery.

Finance ministers in Washington for semi-annual talks took sharper aim than in previous years at the United States' $14 trillion debt.

While most of the criticism came from emerging market economies, some advanced nations joined the chorus.

Dutch Finance Minister Jan Kees de Jager warned that if the United States and other advanced nations move too slowly it could undermine confidence in the global economy.

"Insufficient budgetary consolidation may spark off further escalation of debt sustainability issues, with repercussions on confidence and the still fragile financial sector," de Jager told the International Monetary Fund's steering committee."Debt dynamics in other advanced economies, including the United States, are of concern."

The IMF this week said the U.S. budget deficit was on course to hit 10.8 percent of nation's economic output this year, tying with Ireland for the highest deficit-to-GDP ratio among advanced economies. It urged Washington to move quickly to put a credible plan in place to tighten its belt.

On a Sunday show I heard another tea party type, Sen. Mike Lee from Utah, call for a balanced budget amendment.

I want a balanced budget, but a proportionally smaller public sector spending burden is more important than the exact balance. I would support one of these proposals to cap spending at 20% of GDP, 19%, or if government were defined closer to its constitutional role maybe about half of that rate.

It is Obama's side who want automatic adjustments (tax increases) to kick in if spending restraints do not realize. That is NOT budgeting. A budget would be to say here is GDP, you can spend no more than 20% of it, or here is $2.6 trillion, you can only argue over how to spend it, not how much to spend, until the economy grows further.

Balance Budget amendment would be a big mistake. For the Dems its stalking horse for higher taxes and for the Reps a trap to become tax collectors for the welfare state. THE ISSUE IS SPENDING AND ECONOMIC INTERVENTION/MANIPULATION OF THE ECONOMY.

State Dept. wants to make it harder to get a passportby EDWARD HASBROUCK on APRIL 22, 2011

If you don’t want it to get even harder for a U.S. citizen to get a passport — now required for travel even to Canada or Mexico — you only have until Monday to let the State Department know.

The U.S. Department of State is proposing a new Biographical Questionnaire for some passport applicants: The proposed new Form DS-5513 asks for all addresses since birth; lifetime employment history including employers’ and supervisors names, addresses, and telephone numbers; personal details of all siblings; mother’s address one year prior to your birth; any “religious ceremony” around the time of birth; and a variety of other information. According to the proposed form, “failure to provide the information requested may result in … the denial of your U.S. passport application.”

The State Department estimated that the average respondent would be able to compile all this information in just 45 minutes, which is obviously absurd given the amount of research that is likely to be required to even attempt to complete the form.

It seems likely that only some, not all, applicants will be required to fill out the new questionnaire, but no criteria have been made public for determining who will be subjected to these additional new written interrogatories. So if the passport examiner wants to deny your application, all they will have to do is give you the impossible new form to complete.

It’s not clear from the supporting statement, statement of legal authorities, or regulatory assessment submitted by the State Department to the Office of Management and Budget (OMB) why declining to discuss one’s siblings or to provide the phone number of your first supervisor when you were a teenager working at McDonalds would be a legitimate basis for denial of a passport to a U.S. citizen.

There’s more information in the Federal Register notice (also available here as a PDF) and from the Identity Project.

You can submit comments to the State Dept. online at Regulations.gov until midnight Eastern time on Monday, April 25, 2011. Go here, then click the “Submit a Comment” button at the upper right of the page. If that link doesn’t work for you, it’s probably a problem with the javascript used on the Regulations.gov website. There are alternate instructions for submitting comments by email here.

(Note that the proposed form itself was not published in the Federal Register. The Identity Project was eventually provided with a copy after requesting it from the Department of State, and posted it here.)

Here’s a draft of the comments (PDF) being submitted by the Consumer Travel Alliance and other consumer, privacy, and civil liberties groups and individuals, if you would like to use it for ideas for comments of your own. (It’s also available in OpenOffice format for easier editing.)

Extra points to the person who gives the best answer in the comments to the question on the proposed form, “Please describe the circumstances of your birth including the names (as well as address and phone number, if available) of persons present or in attendance at your birth.”

Local officials, like their federal and state counterparts, spend other people’s money. Policymakers are naturally unlikely to spend other people’s money as carefully as they would their own. This situation is exacerbated when local officials spend money obtained from federal taxpayers. At least when local taxpayers foot the bill, they have an incentive to keep an eye on how their money is spent. That incentive is largely nonexistent when the money comes from Washington.

HUD community development programs illustrate what happens when the federal government severs the relationship between local officials and local taxpayers. Originally targeted to large cities in decline, community development funding is spread widely to communities rich and poor, large and small.

Local officials love these programs because they amount to a free lunch. As a result, they lobby Washington hard for these subsidies, which means federal policymakers generally only hear wonderful tales of the “economic growth” and “job creation” fostered by the programs. However, a Cato essay on HUD community development programs explains that in addition to complexity and wasteful bureaucracy, these programs are susceptible to financial abuses.

Recent stories in the news provide further evidence.

First, years of mismanaging federal community development funds have caught up to the City of Buffalo. The Buffalo News reports that a HUD inspector general audit says the city “could not provide assurance that more than $20.1 million in transactions was properly accounted for.” According to the article, the audit findings are not surprising:

An investigation published in The News in 2004 found the city had frittered away much of its block grant money through parochial politics and bureaucratic ineptitude.

More than half the spending went to “soft costs” that include covering bad loans, paying city salaries and subsidizing an overblown network of neighborhood agencies, The News found. Relatively little went to brick-and-mortar projects, and what was spent to revitalize downtown and neighborhoods was haphazard, with money sometimes going to risky and futile projects.

The mayor and Common Council failed to make major reforms in the program in recent years, and problems have persisted. Two years ago, a HUD monitoring report found continued shortcomings that included too much spending on bureaucrats, questionable financing for upscale housing developments and sloppy fiscal management of several programs.

Next, LA Weekly reports that the City of Los Angeles plans to give $1 million in federal community development funds to the global architecture firm designing the downtown’s proposed NFL football stadium:

Gensler plans to move from Santa Monica to downtown L.A., where it will use the $1 million in federal community-development block grant funds to create a hip, new atmosphere for its relocated employees at the “jewel box,” a three-story building nestled between two skyscrapers at City National Plaza.

Unfortunately, the “hip, new atmosphere” paid for by federal taxpayers probably won’t be the “job creator” that city officials are claiming:

[Mayor] Villaraigosa and City Council members since February have claimed that enticing Gensler from Santa Monica to downtown L.A. is a job creator. But that’s debatable. Some temporary jobs will be created for the jewel box renovation, but Gensler is moving its offices just 20 miles. Many economists would describe L.A.’s action as merely shifting jobs within an intricately intertwined economic area.

A HUD official called the situation “entirely healthy.”

Finally, HUD recently informed the City of Montebello (California) that it had uncovered 31 violations regarding the city’s use of HOME program funds, which are to be used for affordable housing. According to the Whittier Daily News, the report “was so damning it brought interim city administrator Peter Cosentini to tears”:

Last year, HUD demanded that Montebello repay $1.3 million because the city gave a developer HOME money to help build a housing project with affordable units and reported to the federal agency the project was complete, but construction hasn’t started. And a key document submitted to HUD appeared to have been forged, according to the report.

In February, HUD notified city officials that Montebello must also repay nearly $900,000 it used to purchase another parcel of land. The city failed to give HUD needed documents on the property acquisition, including an appraisal, documentation of expenditures and current ownership, according to a Feb. 18 letter from [HUD official] Vasquez to the city.

Cosentini responded in writing, saying city staff has been sent to training as recommended by HUD. Montebello is also conducting an internal investigation into the possible document forgery. The city’s internal investigation of the $1.3 million has been slowed because the developer isn’t cooperating and is “stonewalling” city staff, he wrote. Cosentini also asked for more time to repay the money.

But the city missed a March 1 deadline to submit a repayment plan, according to a letter from Vasquez. And HUD will seek an additional repayment of $2.7 million, Cosentini wrote in the memo.

Take heart federal taxpayers – Montebello city bureaucrats are being “sent to training” per HUD’s recommendation!

Three Senate Democrats angry about the high price of gasoline propose to raise taxes on the firms that produce it. No, it does not make any sense to us, either. For Democrats, expensive gas is just the price of scoring a moral victory over Big Oil, and American consumers will be expected to pay any price and bear any burden that Harry Reid & Co. inflict upon them.

The “Close Big Oil Tax Loopholes Act” is a minotaur’s labyrinth of economic illiteracy, with Democratic senators Robert Menendez (N.J.), Sherrod Brown (Ohio), and Claire McCaskill (Mo.) lurking at the center of it. This A-team of financial sophisticates has taken a hard look at rising gasoline prices and concluded that the most reasonable course of action is to increase the cost of producing oil by “closing tax loopholes” for the five biggest oil companies. Why the five biggest? Why not four or six? Why not all oil companies? Because this is not a bill about tax reform, but a bill about Democrats’ bitterness and impotency in the face of unpleasant economic realities.

The first thing you should know about these oil-company loopholes is that the main items under discussion are not exactly oil-company loopholes. In 2004, Congress enacted an ill-considered tax break for manufacturing companies — one of many harebrained efforts to improve the U.S. economy by empowering politicians to hand out favors to their friends — and the definition of manufacturer was written in such a way as to cover just about any firm with investments in physical capital: Starbucks qualifies for manufacturers’ benefits under the relevant section of the law, known as Section 199. If you hire a guy to build a diving board for your home swimming pool, he’s as much a manufacturer as General Motors.

Which is to say, it is a stupid law, but it is not a law that grants special privileges to oil companies. Congress would be wise to repeal Section 199 in its entirety. In truth, our corporate tax code is a Hieronymus Bosch nightmare of political favoritism, market distortion, and rent-seeking representing the worst aspects of the unsavory nexus between Big Business and Big Government. For that matter, so is the individual tax code, and both should be reformed in roughly the same way: by eliminating exemptions, deductions, and hamfisted attempts at imposing economic policy through the tax regime. Such an approach to reform would, intelligently applied, enable us to reduce tax rates without reducing tax revenue, a very happy result indeed for a great many taxpayers.

Don’t count on that happening. The Democrats would rather use the tax code as an enemies list, and they’re already fighting about what to do with the money they foresee expropriating from oil producers and, indirectly, from gasoline consumers. Some want to use the funds to pretend to reduce the deficit. Sen. Max Baucus (D., Mont.), getting in touch with his inner Barack Obama, has his eyes on the money, too, with big plans to use it to subsidize politically favored automobile manufacturers and enterprises engaged in the alternative-fuels business — as though one ethanol boondoggle and one GM bailout were not enough of a national embarrassment.

Consumer gasoline prices are highly responsive to oil producers’ costs. In a meaningful sense, oil companies are not so much taxpayers as tax-collectors. Singling oil companies out for tax-code punishment may give Democrats a political tingle, but it’s drivers and consumers (How do you think your groceries get to the store?) who will pay the freight.

Along with Section 199, there are other aspects of the corporate tax code that cry out for revision. Rules covering operating expenses and investment costs need to be made consistent. Above all, the treatment of foreign income needs to be updated: The United States, alone among the developed world, makes a tax claim on income earned beyond its legal jurisdiction, placing American companies at a great disadvantage — and leaving trillions of dollars of potentially productive investment capital stranded offshore. Investment analysts took note this week of Microsoft’s purchase of the Internet-telephony firm Skype for $8.5 billion. Microsoft, like many U.S. firms, has a lot of international earnings that it does not wish to pay a 35 percent penalty on for the privilege of returning them to the United States, and it was from these exiled funds that it purchased Skype, which is incorporated not in the United States but in Luxembourg. Being incorporated in the United States would have cost Skype billions of dollars on the deal, a fact not lost on venture capitalists and start-up entrepreneurs — the people who create high-paying jobs, along with goods and services in demand in the real economy.

That’s just one example of how bad tax law is costing the United States jobs, growth, investment — and tax revenue, too. We should simply simplify — a fact that ought to be obvious enough even for these simple senators.

Cato scholars have been appropriately scathing about the federal government’s 2009 “cash for clunkers” program, which paid several billion taxpayer dollars to have older cars scrapped and their engines destroyed, with owners getting vouchers toward new vehicles. When Chris Edwards nominated cash-for-clunkers as the “dumbest government program ever,” he listed among its effects: “Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.”

Guess what’s the newest trouble to hit the car business? As news outlets around the country are reporting, the price of used cars has lately soared to a modern-day record, with some cars commanding more used than they sold for when new. News accounts commonly finger the Japanese earthquake and high gas prices as reasons, but there are some problems fitting either reason to the case. While the earthquake affected the supply of new cars, it’s the previously driven kind that has scored the more impressive price jump. And while the rise in gas prices would explain a relative shift in buyer demand from SUVs and trucks toward smaller vehicles — which has indeed happened — the strength of the used-vehicle market lately has been such that even the thirstier vehicles have advanced in price, $4 gas or no.

No doubt there are multiple reasons for the price spike, including the severe general slump in new-auto sales in recent years, which has reduced the volume of newer cars coming onto the resale market. But — as Washington scrambles to take undeserved credit for whatever passes for normalization in the auto business these days — it’s worth remembering that an artificial scarcity of used cars isn’t just bad for the poor as a group: it’s bad in particular for the upwardly mobile poor, since in most of the country landing a job means needing to line up transportation to get to that job. When it suddenly costs $6,000 instead of $3,000 to get wheels, the move from unemployment to a paying job faces a new and discouraging barrier.

There’s a further irony too. Just as the federal housing stimulus lured many buyers into unwise house purchases at a time when home prices still had a good distance to fall — leaving them worse off in retrospect — so many owners who jumped for the cash-for-clunkers program would have been better off holding on to their cars a while longer. At least that’s what one might conclude from what Frederick, Maryland used-car dealer Robert Cox told his local paper, the News-Post:

People who got $3,500 for the cars they turned in would probably get $5,000 to $7,000 for the same trade today, Cox said.

The federal government’s largest housing construction program for the poor has squandered hundreds of millions of dollars on stalled or abandoned projects and routinely failed to crack down on derelict developers or the local housing agencies that funded them.

Nationwide, nearly 700 projects awarded $400 million have been idling for years, a Washington Post investigation found. Some have languished for a decade or longer even as much of the country struggles with record-high foreclosures and a dramatic loss of affordable housing.

The U.S. Department of Housing and Urban Development, which oversees the nation’s housing fund, has largely looked the other way: It does not track the pace of construction and often fails to spot defunct deals, instead trusting local agencies to police projects.

The result is a trail of failed developments in every corner of the country. Fields where apartment complexes were promised are empty and neglected. Houses that were supposed to be renovated are boarded up and crumbling, eyesores in decaying neighborhoods.

In Inglewood, Calif., a sprawling, overgrown lot two blocks from city hall frustrates senior citizens who were promised a state-of-the-art housing complex more than four years ago. Although the city invested $2 million in HUD funds, the developer doesn’t have the financing to move forward.

In Newark, two partially completed duplexes sit empty in a neighborhood blighted by boarded-up homes lost to foreclosure. The city paid nearly $400,000 to build the houses, but after a decade of delays, the developer folded and never finished. The money has not been repaid.

In Orange, Tex., 35-year-old laborer Jay Breed lives next to a dumping ground littered with tires and other trash, where a nonprofit developer was supposed to build 50 houses for the poor. Five years later, with $140,000 in HUD money gone, no homes have gone up.

“It’s a wasteland,” Breed said.

The Post examined every major project currently funded under the HUD program, analyzing a database of 5,100 projects worth $3.2 billion, studying more than 600 satellite images and collecting information from 165 housing agencies nationwide.

The yearlong investigation uncovered a dysfunctional system that delivers billions of dollars to local housing agencies with few rules, safeguards or even a reliable way to track projects. The lapses have led to widespread misspending and delays in a two-decade-old program meant to deliver decent housing to the working poor.

The Post found breakdowns at every level:

• Local housing agencies have doled out millions to troubled developers, including novice builders, fledgling nonprofits and groups accused of fraud or delivering shoddy work.

• Checks were cut even when projects were still on the drawing boards, without land, financing or permits to move forward. In at least 55 cases, developers drew HUD money but left behind only barren lots.

• HUD has known about the problems for years but still imposes few requirements on local housing agencies and relies on a data system that makes it difficult to determine which developments are stalled.

• Even when HUD learns of a botched deal, federal law does not give the agency the authority to demand repayment. HUD can ask local authorities to voluntarily repay, but the agency was unable to say how much money has been returned.

The D.C. region has a particularly troubled track record. In Prince George’s County, the nonprofit Kairos Development Corp., received $750,000 in 2005 to build dozens of homes. Six years later, Kairos has not built a single house.

“When Kairos came along, I thought this would be something that would help the community,” said Clinton Adams, a local landowner who discussed selling property to Kairos. “What did they do with the money?”

Dozens of housing agencies nationwide acknowledge botched deals and often blame the economy for leaving developers without financing to finish the work.

But hundreds of stalled projects predate the troubled financial markets, with developers tapping HUD’s program for easy money and then escaping even rudimentary oversight from local and federal authorities. The agency’s inspector general for years has chronicled scores of delayed projects and millions in waste.

“We need to reduce the risk for HUD funding in development deals,” said Annemarie Maiorano, who manages HUD money for Wake County, N.C. “There needs to be basic standards.”

HUD officials said they have recently tried to determine why developments are delayed and have begun to cancel projects. In response to inquiries from The Post, the agency last month launched investigations into a series of defunct deals, finding questionable payments and excessive delays, and in recent weeks has sought the return of more than $4 million from housing agencies in the District and Prince George’s County.

“We can do better and we will,” said Mercedes Marquez, HUD’s assistant secretary for community planning and development, who was nominated by President Obama in 2009. “HUD, the Congress and every taxpayer I know expects these funds to be put to work. . . . I won’t hesitate to do what’s necessary.”

A program that began with great promise for the poor

Past HUD scandals have involved misused vouchers for rental properties, unsafe conditions in public housing and corruption in grant-making programs. The Post’s investigation is the first systemic look at the progress of construction in HUD’s affordable-housing fund, known as the HOME Investment Partnerships Program.

The program launched with great promise two decades ago, when Congress vowed to fund the construction or renovation of thousands of apartments and houses for working-poor families.

Since 1992, HUD’s vast main office on 7th Street in Southwest Washington and its 43 field offices have overseen $32 billion in funding, which is distributed in block grants to 642 cities, counties and states. They, in turn, partner with developers, giving out grants or loans with generous terms such as delayed repayment, low interest rates and outright forgiveness of debt.

HUD’s money typically doesn’t cover all construction costs. The program is meant to provide partial funding for developers who are expected to draw additional financing from banks and other sources.

Clearly, building in blighted neighborhoods can be challenging, with private financing and political will hard to come by. Over the years, local housing agencies and their development partners have completed thousands of projects.

But hundreds of current projects have faced years-long delays, with a similar pattern playing out in city after city.

Behind many of the deals are developers who didn’t have land, permits, financial capacity or commitments for private financing. HUD has few underwriting standards: Housing agencies are required to ensure that developers have a proposed budget and construction schedule — but not proof that they have the money to start building.

Other developers have had little housing experience or were dogged by foreclosures, cost overruns, liens and allegations of defective work. In most cases, HUD requires only that housing agencies ensure that developers have not been barred from doing business with the federal government.

HUD officials say local agencies are supposed to apply their own rules and choose developers capable of beginning construction within a year and eventually completing the job. “This is what comes with having the flexibility of a block grant, where you respect local decisions,” Marquez said.

In the District, which receives $9 million annually in HUD housing construction funds, the lapses have produced a series of troubled projects.

Alicia Marshall was a 33-year-old novice landlord in 2004 when she bought an aging, six-unit apartment building on Foote Street NE for $245,000. Within months, city inspectors cited Marshall for code violations that included leaks, cracked ceilings, broken doors and no heat.

Marshall agreed to renovate if tenants gave up their rent-controlled units. Although she had little construction experience, the District gave her $600,000 in HUD funds in 2008.

A project plan in city files noted that Vincent Ford, the former D.C. chief building inspector, would oversee the renovation. Ford, however, told The Post that he did not act as the project manager. “Didn’t happen,” he said.

The plan also noted that the construction work would be done by Calvert County resident Richard Hagler, 54, whose company, according to the plan, had worked for government agencies, built custom homes and refurbished apartment buildings. The Post found that Hagler and his companies have faced a string of civil judgments, and in 2006 agreed to a $250,000 settlement after being sued for shoddy construction. He has declared bankruptcy three times in the last decade, records show.

In 2009, Marshall’s building twice failed District construction inspections, a city official said. Later that year, after months of delays, the city approved a certificate of occupancy.

But evidence of substandard work continues to crop up. Soon after retired truck driver Grady Baxter moved in last year, part of his bathroom ceiling collapsed and sewage from the apartment upstairs soaked the walls.

“They started work on it,” he said, “but didn’t come back.”

The D.C. Department of Housing and Community Development defended the project. “Marshall assembled a skilled team to manage the renovations,” spokeswoman Najuma Thorpe said.

When contacted by The Post last month, HUD officials initiated an investigation into the quality of construction.

Many nonprofit agencies lacking in experience

One of the few rules HUD imposes actually contributes to the number of failing projects. Federal law mandates that housing agencies give 15 percent of their funding to community-based nonprofit groups, which are often undercapitalized and lack experience.

“Development is hard for developers. It’s complex. It’s risky,” said Maiorano of Wake County. “Then there are these mom and pops who don’t know things . . . we’re asking them to try to do something that they have no experience in.”

In Newark, the Department of Economic and Housing Development invested more than $2 million since 1995 in five projects that promised dozens of new homes. But every development ran aground when the developers, mostly small nonprofits, could not complete the work or fell into foreclosure, records show.

On South 13th Street in the shadow of downtown Newark, children play next to an empty lot filled with trash and mattresses, where a nonprofit developer drew $50,000 but built nothing. “It’s just dirt,” said eight-year-old Shakina Boulding. “There should be grass and flowers.”

One mile away, on a distressed stretch of Littleton Avenue, two partially completed duplexes that cost the city nearly $400,000 sit empty behind an unlatched fence.

“They’ve been like that for over seven years now,” said Wade Tapp, 45, a recreation center director who owns an apartment building across the street. “It’s quite shameful.”

Newark’s new housing chief, Michael Meyer, said he is trying to recoup money and change the city’s policies. “The public has not gotten what it intended to get when we started these projects,” he said.

Two of the most troubled projects in the D.C. region were proposed by Kairos Development Corp., which won $400,000 in HUD funding from Prince George’s County in May 2005 after promising several houses and an apartment complex with as many as 150 units on a winding, rural stretch of Middleton Lane in Camp Springs.

The nonprofit had little construction experience, offered none of its own money and had no other funding committed to the project, records show.

Kairos eventually bought two properties with the HUD money, but six years later, nothing has been built.

At the same time in 2005, Kairos received a second HUD loan from the county, for $350,000, for 56 condominiums proposed on a wooded hillside on Naylor Road near the District line. The nonprofit did not own the land or have permission to build on it.

The owners of the property were Lashelle Adams, a hairdresser, and her father, Clinton, who ultimately decided not to sell to Kairos.

The project exists now only as a three-digit number on HUD’s books.

Harold Davis, executive director at Kairos, blamed the delays on the economic downturn and a surplus of condominiums in the region, adding that the money was spent on architectural, development, legal and consulting fees. In a written response to The Post, he said the Naylor Road project became “unfeasible due to significant change in selling prices.” He said the Middleton Lane project is still viable.

County spokeswoman Angela Wright said a new administration has no knowledge of either project. Kairos was allowed to keep the HUD money; the county wrote off both loans. It is unlikely that the group could repay anyway: On its 2009 tax return, the nonprofit reported that it was $1.2 million in the red.

When contacted by The Post, HUD officials said the loans made to Kairos were excessive. Last month, federal officials sent a letter to Prince George’s County seeking the return of nearly $550,000. HUD has also banned Prince George’s County from awarding any more money to community-based groups without the agency’s approval.

“I’m appalled, just appalled,” said Marquez, HUD assistant secretary. “We’re just not standing for it.”

A resident asks,

‘Where did the money go?’

At the heart of the problem lies HUD’s failure to track the pace of construction.

HUD monitors only when local agencies draw money from their federal accounts, not what is actually being built. That leaves HUD with little way of knowing when projects stall or die. Local housing agencies are supposed to notify the federal government, but they often fail to say anything.

“If [housing agencies] fail to terminate projects as they should, we may not be aware of them right away,” Marquez said.

She said that it is not feasible for HUD to monitor thousands of ongoing developments and that local agencies should have their own project-tracking systems.

But the actual number of stalled or terminated projects is likely to be much higher. The Post identified an additional 2,800 projects worth $1 billion that are in “final draw,” meaning the projects drew all of their allotted HUD funding but are still listed as open and ongoing in HUD’s records.

In some cases, the work was completed, but local agencies had failed to tell HUD. In other cases, however, projects were delayed or scrapped. The Post found abandoned projects in final draw from Texas to Florida to the D.C. region.

One dead project listed in final draw was proposed for downtown Rockville, where the nonprofit Montgomery Housing Partnership received $550,000 in 2008 to build a 109-unit apartment building.

The project struggled with funding gaps, opposition from neighbors and a lack of support from elected officials. Three years later, nothing has been built.

Montgomery Housing Partnership President Robert Goldman said the development is no longer viable and the nonprofit is hoping to roll the money into a future project. “This is really a very unusual circumstance,” he said.

The nonprofit had another project go bad adjacent to that empty lot.

In the 1990s, the group renovated a 14-unit building that was later condemned with leaks and mold. It is still shuttered, with a sign on the front door that warns, “Dangerous and Unsafe.”

One of the oldest unfinished projects in the country sits on a desolate stretch of High Street in Southeast Washington, where the shells of three apartment buildings rise above overgrown brush and rotting heaps of trash. In 2001, the District delivered nearly $800,000 in HUD funding to the nonprofit Safe Haven Outreach Ministry, but a decade later, no renovations have been done.

A neighbor posted a makeshift sign in front of the rubble: “Celebrating Life in Anacostia.”

Nearby resident Bernadine Thomas wants to move into a refurbished apartment but can’t find one that she can afford in a region with some of the highest rents in the country. She drives by the unfinished buildings on High Street and imagines a different life.

“Where did the money go?” said Thomas, a 60-year-old retired apartment manager who has lived for three years in a leaky complex that reeks of sewage. “I’ve worked all my life. All I want is a decent place to live.”

Marsha Richerson, Safe Haven’s executive director, said that the nonprofit did not anticipate problems getting permits and private funding, and that the housing agency was aware of the delays.

“They knew everything,” she said. “They knew we had a credible defense.”

City officials extended Safe Haven’s construction deadlines, hoping the project would eventually be completed. The agency “makes every attempt to work with developers to bring these projects to fruition,” said Thorpe, the D.C. housing agency spokeswoman.

In December, HUD identified the project as stalled through an audit and asked the District to repay the $800,000. So far, no money has been repaid. District officials said they are going to ask HUD to reconsider.

HUD can’t compel local authorities to repay

Even when HUD learns of a bungled deal, federal law does not give the agency the ability to compel local authorities to repay. HUD can only ask agencies to voluntarily return money by replenishing their federal accounts from local funds, essentially moving their own money around. HUD officials said local authorities almost always comply when asked to repay. HUD, however, could not provide statistics on how much has been returned. Officials said they have not felt a need to compile the data because it is tracked by HUD field offices.

The agency can reduce grants to housing agencies if HUD funding is not spent quickly enough, which creates pressure to move money out but does not ensure that construction is completed. Grant reductions for missed spending deadlines have happened just 20 times since 1992, with HUD taking back a total of $7.5 million, The Post found. Much of the money came from Prince George’s County, which last year forfeited $2.2 million.

HUD also has an enforcement center staffed with lawyers who can pursue repayments before an administrative law judge or in a criminal case in federal court. The agency has taken five cases to enforcement since the program began two decades ago, recouping about $19 million, The Post found. The agency has never taken a case to court.

HUD officials said they don’t need a more robust enforcement effort, again citing the success of voluntary repayments.

Marquez said the agency is focused more than ever on delayed projects and recouping money.

(From Political Economics)"This could also belong in the Budget thread.Maybe I am missing something, but IIRC all spending bills must originate in the House of Representataives-- which is controlled by the Republicans. So why don't they just pass spending bills as they see fit and leave it to the Senate and BO to take the blame for not passing it?"

You are correct. It doesn't get spent without originating in the House. The President's budget (if there was one) gets a hearing only if a house member introduces it in committee (as I understand it).

The problems are spin and ownership.

If Republicans suddenly did what I just suggested - spend within our means (2.2 trillion/yr) now by not raising the debt limit - they will look insincere and inconsistent. They were willing to spend 3.6T a minute ago.

If Republicans force something like a 3.6T budget, take it or leave it, then the trillion and half dollar deficit becomes theirs, along with all the allege hardship that 'underspending' will cause, hitting women and children the hardest.

Our lead-from-behind President wanted R's to go first so he could accuse and attack. R's want the Pres. to go first to show they are making serious cuts - while still authorizing trillion plus dollar deficits.

It's an ugly situation.

The answer pragmatically is to identify everything federal that needs to end and everything federal that needs to be downsized, then write a multi-year phaseout that gets us to a balanced budget and full employment in a short period of time. And stick to it.

One principle they could try to uphold would be to end everything now that they told us was temporary emergency spending.

Economists Timothy Conley and Bill Dupor have studied the effects of the American Recovery and Reinvestment Act (the purported stimulus bill) with great rigor. Earlier this week, they reported their findings in a paper titled "The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled." The paper is dense and rather lengthy, and requires considerable study. Here, however, is the bottom line:

Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.

So the American people borrowed and spent close to a trillion dollars to destroy a net of more than one-half million jobs. Does President Obama understand this? I very much doubt it. When he expressed puzzlement at the idea that the stimulus money may not have been well-spent, and said that "spending equals stimulus," he betrayed a shocking level of economic ignorance.

Family Facing $4 Million in Fines for Selling Bunniesby Bob McCartyAlmost nine months after a Missouri dairy was ordered to stop selling cheese made from raw milk, I share details of another hare-raising story from the Show-Me State: John Dollarhite and his wife Judy of tiny Nixa, Mo., have been told by the USDA that, by Monday, they must pay a fine exceeding $90,000. If they don’t pay that fine, they could face additional fines of almost $4 million. Why? Because they sold more than $500 worth of bunnies — $4,600 worth to be exact — in a single calendar year.

About six years ago, the Dollarhites wanted to teach their young teenage son responsibility and the value of the dollar. So they rescued a pair of rabbits — one male and one female — and those rabbits did what rabbits do; they reproduced. Before long, things were literally hopping on the three-acre homestead 30 miles south of Springfield, and Dollarvalue Rabbitry was launched as more of a hobby than a business.“We’d sell ‘em for 10 or 15 dollars a piece,” John said during a phone interview Tuesday afternoon, comparing the venture to a kid running a lemonade stand. In addition, they set up a web site and posted a “Rabbits for Sale” sign in their front yard. Most customers, however, came via word of mouth.In the early stages, some of the bunnies were raised and sold for their meat. Much further down the road, John said, they determined it more profitable to sell live bunnies at four weeks old than to feed bunnies for 12 weeks and then sell them as meat.“We started becoming the go-to people” for rabbits in the Springfield area, John said. “If you wanted a rabbit, you’d go to Dollarvalue Rabbitry.” He added that the family even made the local television news just before Easter in 2008 for a report about the care and feeding of “Easter bunnies.”Initially, the Dollarhites sold the large, white, pink-eyed variety of rabbits. Eventually, however, they switched to selling a couple of different varieties of miniature rabbits, the mating pairs of which were purchased from breeders across the state. Not only did their “show-quality” miniatures reproduce well, but they ate less and seemed to be more popular with theme park visitors and retail buyers.During the summer of 2009, the Dollarhites bought the rabbitry from their son who had grown tired of managing it. They paid him what he asked for it, $200. Things kept growing, however, and the Dollarhite’s landed a pair of big accounts in 2009.A well-known Branson theme park, Silver Dollar City, asked the Dollarhites to have them provide four-week-old bunnies per week to their petting zoo May through September. When the bunnies turned six weeks old, they were sold to park visitors. The Springfield location of a national pet store chain, Petland, purchased rabbits from the Dollarhites as well.In the fall of 2009, the theme park deliveries ended for the year and the Dollarhites scaled back their operation. At about the same time, the folks at Petland asked the Dollarhites to raise guinea pigs that the store would purchase from them. No big deal.By the year’s end, the Dollarhites had moved approximately 440 rabbits and grossed about $4,600 for a profit of approximately $200 — enough, John said, to provide the family “pocket money” to do things such as eat out at Red Lobster once in a while. That was better than the loss they experienced in 2008.Then some unexpected matters began demanding their attention.It’s an understatement to describe the Dollarhites as being “beyond surprised” when, in the fall of 2009, a female inspector from the U.S. Department of Agriculture showed up at the front door of the family home, wanting to do a “spot inspection” of their rabbitry. She said she had come across Dollarhite Rabbitry invoices while inspecting the petting zoo at Silver Dollar City.“She did not tell us that we were in violation of any laws, rules, anything whatsoever,” John said, explaining that the inspector said she just wanted to see what type of operation they had. Having nothing to hide or any reason to fear they were doing anything wrong, the Dollarhites allowed the inspection to proceed.John said he had to go to work at the family’s computer store, so Judy took the inspector to the back of their property where the rabbits were raised. There, the inspector began running the width of her finger across the cage and told the Dollarhites they would need to replace the cage, because it was a quarter-inch too small and, therefore, did not meet federal regulations.Such a requirement came as a shock to the Dollarhites, because they had just invested in new cages to ensure the bunnies had a healthy amount of space to develop, John explained. Though raising dwarf breed varieties of rabbits which require less space, they had opted to purchase cages designed for “large breed rabbits” so the dwarfs would have plenty of room. All for naught.Not only was the cage too small, according to the inspector, but she noted a small rust spot on a feeder and cited it as being out of compliance. When the Dollarhites told the inspector that rabbit urine causes the cages to rust and that they worked hard to keep the rabbits cages in top shape, she told them it didn’t matter. The rust spot would count as an infraction.The inspector then asked how the cages were sanitized, John said, and Judy explained how she moved the bunnies to travel carriers and powerwashed the cages, using bleach when necessary. Afterward, she allowed the cages to dry in the sun before putting the bunnies back inside them.The Dollarhites’ practice was much safer than that used by some breeders who used blow torches to burn hair and manure from the cages — a practice that can lead to rusting metal and produce toxic fumes from burning metal.During the course of the spot inspection, John said, the inspector asked his wife if she and John would like to have their operation certified by USDA. Judy said she wasn’t sure and asked what certification would entail and if it would help them sell more rabbits. The inspector responded, telling her it would involve monthly inspections and was completely voluntary. The inspection ended with the inspector telling Judy that the Dollarhites rabbits looked healthy and well-cared for.After the inspection, the Dollarhites didn’t hear from the USDA again until January 2010, John said, when he received a phone call from a Kansas City-based investigator from the USDA’s Animal and Plant Health Inspection Service.“He called us and said, ‘I need to have a meeting with you and your wife,’” John recalled.After explaining that he asked the investigator to come after the workday at the computer store had ended, John said he asked the investigator about the purpose of the meeting,“He said, ‘Well, it’s because you’re selling rabbits and you’ve exceeded more than $500 dollars in a year,’” John said, “and I went, ‘Okay, what does that have to do with anything?’”John said the investigator refused to discuss details over the phone and made it clear that rejecting his request for a meeting would be a costly error in judgment.When Judy asked if they should have an attorney present, the investigator responded, saying, “Well, that might be a good thing.”“At that point, we kind of set back, (wondering) what in the world is going on,” John said. Then he found an attorney who is also a farmer.“I didn’t want a ‘city slicker,’” said John, a farmer himself until 1996 when he sold his farm to build a home in Nixa. “I wanted someone that had been around the agriculture and farm business.”John found a guy and they met for the first time a couple of days later — at the same time both met the APHIS investigator in person at John’s home.“The first thing (the investigator) said was ‘My name is so and so, I’ve been in the USDA for 30-plus years, and I’ve never lost a case,’” John recalled, continuing. “He said, ‘I’m not here to debate the law, interpret the law or discuss the law, I’m here just to do an investigation.’”John said the investigator went on to explain that he would ask questions, write a report based on the answers and send that report to his superiors at the USDA regional office in Colorado Springs, Colo. The entire process was suppose to take about a month, and John was told to contact the regional office if he had not heard anything in six weeks.“At this point in time, we were still not knowing anything about the law he was talking about,” John explained, adding that his rabbitry had never had any issues with any animal welfare agencies.Eight weeks passed, and John decided to call Colorado Springs. Immediately, he was given the number to a USDA office in the nation’s capitol. He called the new number, and the lady he reached there was blunt, John said.“She said, ‘Well, Mr. Dollarhite, I’ve got the report on my desk, and I’m just gonna tell you that, once I review it, it’s our intent to prosecute you to the maximum that we can’ and that ‘we will make an example out of you.”When John once again tried to determine which law he and his wife had violated, he said the USDA lady replied, “We’ll forward you everything.”“Ma’am, what law have we broken,” John said.“Well, you sold more than $500 worth of rabbits in one calendar year,” she replied, according to John.“Okay, what does that have to do with anything?” John countered.The lady replied by saying there is a guideline which prohibits anyone from selling more than $500 worth of rabbits per year, John recalled, but she refused to cite any specific law and, instead, promised to send him the report containing details.At that point, John said he called his attorney and was told not to worry about it, because he couldn’t find evidence of any law or regulation the Dollarhites had violated.Soon after the meeting with the APHIS investigator and with the stress of the investigation hanging over their heads, John said he and his wife traded everything associated with the rabbit operation for other agricultural equipment.At this point, some important facts about the manner in which the Dollarhites conducted their operation are worth reviewing:The business was carefully conducted on the property of their Missouri home;The business complied with all applicable state laws;The bunnies were kept in large, clean and well-maintained cages; andNot a single bunny was sold across state lines.Recently, the Dollarhites received a “Certified Mail Return Receipt” letter (dated April 19, 2011) from the USDA informing them that they had broken the law and must pay USDA a fine of $90,643. Their crime? Violating violating 9 C.F.R. § 2.1 (a) (1): Selling more than $500 worth of rabbits in a calendar year.At this point, Dollarvalue Rabbitry is expected to produced a $90,643 certified check to cover the fine issued by the Department of Agriculture. The USDA was, however, kind enough to provide in the letter the web address for a website — www.pay.gov — where they could go to pay their fine by credit card by May 23, 2011. Now, that’s convenient!Based on an average price per rabbit sold being $10.45, the fine comes out to more than $206 per rabbit. In addition, the letter contains the following statement:APHIS laws and regulations provide for administrative and criminal penalties to enforce these regulatory requirements, including civil penalties of up to $10,000 for each of the violations documented in our investigation.If the threat contained in the letter is to be believed, the family could be fined as much as $10,000 per rabbit beyond the first 50 bunnies that netted the family its first $500. Do the math (390 rabbits x $10,000 each) and, if they don’t pay the initial fine, they could face additional fines totaling $3.9 million.Needless to say, the Dollarhites stopped selling rabbits in January 2010 and are considering setting up a legal defense fund.To see what the USDA has to say about the matter, read my follow-up post, USDA Stands Behind Hare-Raising Fine.Hat tip: Bungalow Bill’s Conservative Wisdom

China food choices reshaping world marketsBy Howard Schneider, Published: May 22Beijing — For a sense of how this country’s changing demand for food is reshaping world markets, Liu Shuwen’s journey from street chicken vendor to poultry industrialist is a good start.There are the 24,000 hens he currently raises, triple what he had a few years ago. There’s the expansion to 60,000 he is planning. Then there’s the feed factory that’s under construction, where Liu and his partner will add to growing world grain demand by mixing hundreds of tons of soybeans and corn a year into a recipe he feeds his chickens and sells to other farmers.

It’s a dramatic turn for a man who grew up incubating chicks under his bed, and one that shows why farmers, food economists and others conclude that the world may be entering an era of steadily rising food prices. As developing countries become richer, so do their diets, shifting from traditional staples such as rice and wheat to meat and dairy products, which require more grain as feedstock. That trend, along with the increasing use of corn in fuel, is taxing world grain supplies.

SNIP____

“We are keeping up with the world,” said Liu, who migrated to Beijing from the countryside 30 years ago. He once roamed the streets selling baby chicks out of a bucket. Then he and a veterinarian named Zhang Huaicheng took over a bankrupt state-owned chicken farm. The pair specialize in brood hens, incubating millions of eggs a year into hatchlings for sale to other farmers who want to produce eggs or broilers.

So, Barack Obama thinks Israel should give up the land it acquired in the Six-Day War, rolling back to its 1967 borders. Good going, Barack! In less than a minute, you not only infuriated another staunch ally of the United States, but you (if I might employ an image you favor) “moved the goal posts” in the Middle East such that Israel’s enemies will henceforth cite you when demanding that Israel neuter itself.

Suicide, national or personal, is rarely a wise career move, so I believe we can be pretty certain that Israel will ignore your suggestion. But your invocation of 1967 is by no means barren. I was talking to a friend last night who had this alternative suggestion. Leave Israel alone and roll back the U.S. Government to its 1967 size.

I wish he had said 1965: that was the annus mirabilis when Lyndon Johnson, with a profligacy that still, even now in the age of Barack “Have-a-Trillion” Obama, makes one pause and wonder. Remember the “Great Society”? Money, meet toilet. The “war on poverty”: back in mid-Sixties 1965 it cost only $1 billion per year (about $7 billion in today’s dollars). But the government was wasting as much as it could as fast as it could. And of course, the “war on poverty” was only the tip of the iceberg. There was also the department of education—what a waste of money that has been! And don’t forget about “Public Broadcasting,” also a silly idea but also, in the age of the internet and cable TV, a completely superannuated one. And then there were the real biggies: Medicare and Medicaid, which together cost the taxpayer some $700 billion per year.

There were other, many other stupid ideas to come out of the “Great Society” years, the National Endowments, for example, and let’s not forget that stupendous blight on the economy, Environmental Protection Agency.

The President’s remarks about Israel were both silly and dangerously irresponsible. But his idea of returning to the strictures of an earlier time has great possibilities on home front. I hope concerned citizens will start to make the case: 1965 or bust!

By KARL ROVE Five and a half weeks after House Republicans passed their budget, Democrats and liberal pundits have decided it is political kryptonite that will fatally weaken the GOP.

Their evidence is Tuesday's special election in New York's 26th district, where Democrat Kathy Hochul defeated Republican Jane Corwin for a vacant congressional seat. This is not just any congressional district, but one carried by George W. Bush and John McCain in the last two presidential elections, and one represented for 58 years by a Republican.

Liberals can barely contain their glee. MSNBC's Ed Schultz said the outcome left "Republicans scrambling" while the Washington Post's E.J. Dionne said "it will petrify" Republicans. Sen. Patty Murray (D., Wash.) said it proved "Democrats have the keys to drive the budget debate and play offense in 2012."

Most, but not all, of this is wishful thinking. Ms. Hochul won a plurality (47%) of the votes, not a majority, getting only one percentage point more than Barack Obama as he was losing the district in 2008. Not exactly a compelling performance.

Democrats won only because a third-party candidate—self-proclaimed tea partier Jack Davis—spent a reported $3 million of his own money. Absent Mr. Davis as a spoiler—he got 9% of the vote—Democrats would never have made a serious bid for this district, nor won if they did. Ironically, Mr. Davis ran for the same seat in the last three elections as a Democrat. This year he ran as a populist conservative.

Still the question remains: Did the Medicare reforms proposed by House Budget Committee Chairman Paul Ryan and supported by Ms. Corwin play a role in the outcome? The answer is yes, though not with the blunt force and trauma some Democrats are claiming.

Polling by American Crossroads (an independent expenditure group with which I'm associated) showed that while Ms. Hochul's Medicare attacks galvanized Democrats, they swayed few independents. Among voters who had an unfavorable view of Ms. Corwin, just 20% focused on Medicare, with most Democrats already voting for Ms. Hochul.

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Associated Press

Jane Corwin .A larger percentage of those voters with an unfavorable opinion of Ms. Corwin's campaign—26%—were concerned about an ugly on-camera incident involving her chief of staff yelling at Mr. Davis in a parking lot. These voters felt Mr. Davis was being unfairly harassed. The defection of these overwhelmingly Republican and independent voters doomed Ms. Corwin.

That's not to say Medicare didn't play an important role. Ms. Hochul pummeled Ms. Corwin over it. The GOP candidate did not respond with TV ads until the campaign's closing week, and only then with an ad many voters thought lacked credibility. It alleged Ms. Hochul had endorsed Medicare and Social Security cuts that she claimed she had not.

An earlier, more aggressive explanation and defense of the Ryan plan would have turned the issue: 55% in the Crossroads survey agreed with GOP arguments for the Ryan reforms while just 36% agreed with the Democrats' arguments against it.

Next year, Republicans must describe their Medicare reforms plainly, set the record straight vigorously when Democrats demagogue, and go on the attack. Congressional Republicans—especially in the House—need a political war college that schools incumbents and challengers in the best way to explain, defend and attack on the issue of Medicare reform. They have to become as comfortable talking about Medicare in the coming year as they did in talking about health-care reform last year.

There needs to be preparation and self-education, followed by extensive town halls, outreach meetings, visits to senior citizen centers, and the use of every available communications tool to get the reform message across.

A good starting point is Mr. Ryan's message from his speech at the Economic Club of Chicago that his Medicare reform package "makes no changes for those in or near retirement, and offers future generations a strengthened Medicare program they can count on, with guaranteed coverage options, less help for the wealthy, and more help for the poor and the sick."

The populist note is especially important: When he starts receiving Medicare, Bill Gates should bear a greater share of his health-care costs than the less healthy or less wealthy.

Defense, no matter how robust, well-informed and persistent, is insufficient. Republicans must also go on offense. Democratic nonchalance towards Medicare's bankruptcy in 2024 and the crushing debt it will leave for our children gives the GOP the chance to depict Democrats as tone deaf, irresponsible and reckless. The country can't afford Democratic leaders who simply order the orchestra to play louder as the Titanic tilts and begins to slide under.

Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of "Courage and Consequence" (Threshold Editions, 2010).

Saw Paul Ryan interviewed by Bret Baier this evening. Very impressive guy, able to express himself clearly, briefly, confidently, and effectively-- but I agree where he is right now (Chairman of House Budget Committee IIRC) is where he can do the most good. ======================

We're at a funny place. The American establishment has finally come around, in unison, to admitting that America is in crisis, that our debt actually threatens our ability to endure, that if we don't make progress on this, we are going to near our endpoint as a nation. I am struck very recently by the number of leaders in American business, politics and journalism who now get a certain faraway look at the end of an evening or a meal and say, "It's worse than people think, you know." The debt crisis in Europe is not easing but worsening, the U.S. bond markets could bail tomorrow, the culture of Washington will kill any serious attempts at reform . . .

The American establishment, on both sides of the political divide, is admitting as never before that we are in an existential challenge. And this is progress. It was not always so! It wasn't so two years ago.

That's one takeaway from this week's Peterson Foundation fiscal summit in Washington. Bill Clinton spoke of "permanent structural deficits" and warned that "arithmetic still matters." We must focus on entitlement spending, he said, "for the same reason Willie Sutton robbed banks: That's where the money is." Virginia's Democratic Sen. Mark Warner: "Congress is Thelma and Louise in that car headed for the cliff." Obama administration economic adviser Gene Sperling—more on him in a minute—called for "serious discussion" of the specifics of a debt-reducing plan.

Republicans were on the same page. No one said, "We can grow our way out of this thing," or "The negative effects of chronic debt are exaggerated, let's look at the positive side." They would have been laughed out of the room.

The people, of course, saw the crisis coming before most politicians did, and every elected official in Washington is now quick to preface interviews with, "The people were ahead of us on this." They say this with an air of discovery, the little Sherlocks. The people were ahead of them. Public concern began to deepen in the polls after the introduction of the new spending bills that followed the crash of 2008. Voter concern was made vivid in the 2009 and 2010 elections, when centrists voted like old-style Republicans who worried about red ink.

Elected officials began to get the message. Now they've got it. Our spending and debt are—and it is interesting that this is the first great buzzword of the new decade—"unsustainable."

But here's how we're in a funny place. The great question now is whether the people who alerted the establishment to the crisis will trust that establishment to deal with it. The people have been like Paul Revere riding through the night warning, "The bankruptcy is coming!" It's unclear whether they'll now trust the politicians to take the right action.

There are many reasons the public might resist Washington's prescriptions, and we know what they are. There are data demonstrating that people like government programs but not government costs. Many people feel they've personally played by all the rules and will reject any specific cuts or taxes that will put new burdens on them.

There's also this. The very politicians who are trying to get us out of the mess are the politicians who got us into the mess. Why would anyone trust them? As Alan Simpson admitted, for generations politicians "were told to go to Washington and bring home the bacon. Go get the money!" Now they must change: "You can't bring home the bacon anymore, because the pig is dead."

Some of the politicians talking about how to stop the spending crisis are the same politicians who, for many years, said there was no crisis. They're like forest creatures who denied there was a fire when everyone else could smell the smoke and hear the crackle. Then the flames roar in, and the politicians say, "Follow me, I know the path out of the blaze!" It will be hard for them to win the trust that will get the American people to back a path out and through.

Rep. Paul Ryan was at the summit, soldiering on. His main problem on Medicare is that people fear the complexities and demands of a new delivery system.

People who draw up legislation, people capable of mastering the facts of the huge and complicated federal budget, often think other people are just like them. It's almost sweet. But normal people don't wear green eyeshades. Republicans think people will say, when presented with new options for coverage, "Oh good, another way to express my freedom! I can study health insurance now and get a policy that will benefit not only me but our long-term solvency!" But normal people are more likely to sit slouched at the kitchen table with their head in their hands. "Oh no, another big decision, another headache, 50 calls to an insurance company, another go-round with the passive-aggressive phone answerer who, even though she's never met me, calls me Freddy as she puts me on hold."

Republicans believe government gives insufficient respect to the ability of people to decide things for themselves, and that's true. But it's also true that normal humans don't relish making informed decisions about things they're not sure of, and that carry big personal implications.Here's the great thing about Medicare: You turn 65 and it's there. They give you a card and the nurse takes it. (MARC: This seems to me to be a very perceptive observation.)

Supporters of Mr. Ryan's Medicare plan must talk very specifically about how this would all work, and why it would make your life better, not worse. They also have to make two things clearer. One is that if nothing is done to change Medicare, the system will collapse. You'll give the card to the nurse and she'll laugh: "We don't take that anymore." This already happens in doctors offices. Without reform it will happen more often.

Democrats, on the other hand, should be forced to answer a question. If you oppose the highly specific Ryan plan, fine, but tell us your specific proposal. How will you save Medicare? Will you let it die?

If Obama economic adviser Gene Sperling's presentation at the summit was indicative of White House strategy, then we're in trouble. Because that strategy comes down to windy and manipulative statements about how "we're all in this together" but GOP proposals "will lead to millions of children . . . losing their coverage." He added: "We are not criticizing their plan, we are explaining it."

It is a long time since I've seen such transparent demagoguery, such determined dodging. It's obvious the White House political plan for 2012 is this: The Democrats will call for fiscal discipline and offer no specifics or good-faith starting points. They will leave the Republicans to be specific, and then let them be hanged with their candor. Democrats will speak not of what they'll do but only of what they would never do, such as throw grandma out in the snow. In honeyed tones, Mr. Sperling said both parties should "hold hands and jump together," like Butch and Sundance. But it was clear Sundance was going to stop at the edge of the cliff and hope Butch gets broken on the rocks.

With his appearance at a Toledo factory today, President Obama seems to want to make the auto bailout a campaign issue. Let’s welcome that. Americans should understand what transpired.

Fancying himself “Savior of the Auto Industry,” the president deserves credit only for choosing to insulate two companies (and the UAW) from the consequences of their decisions. But with that credit he must accept responsibility for sluggish U.S. business investment, limited job creation, and the anemic economic recovery, which is due in no small measure to the regime uncertainty that descends from his intervention in the auto industry.

The administration suggests that the entire cost of the auto bailout is captured by the outlays that haven’t or won’t be returned. Despite much smaller claims from the administration, that figure will be about $5.5 billion in Chrysler’s case (the administration is overlooking $4 billion written off when New Chrysler emerged from bankruptcy), and somewhere from $7-$15 billion in GM’s case (depending on average share price for 500 million shares). Should that loss have to be reported to the FEC on a dollar-per-auto-worker-vote basis?

But the costs are much greater than these outlays.

The most compelling objections to the bailout were not rooted in the belief that the government couldn’t use its assumed power to help Chrysler and GM. On the contrary, the most compelling objections were over concerns that the government would do just that. It is the consequences of that intervention—the undermining of the rule of law, the confiscations, the politically driven decisions, and the distortion of market signals—that animated the most serious objections. Ford never publicly objected to the interventions to rescue its rivals. Do you think Ford may feel entitled to a future bailout if needed, having foregone the recent one? Does Ford think it has a pretty good insurance policy if it takes excessive risks that go awry? This is a cost that’s tough to measure, but an important cost nonetheless.

Any verdict on the outcome of the auto industry intervention must take into account, among other things, the billions of dollars in property confiscated from the auto companies’ debt-holders; the higher risk premium built into U.S. corporate debt as a result; the costs of denying the other more successful auto producers the spoils of competition (including additional market share and access to the resources misallocated at Chrysler and GM); the costs of rewarding irresponsible actors, like the UAW, by insulating them from the outcomes of what should have been an apolitical bankruptcy proceeding; the effects of GM’s nationalization on production, investment, and public policy decisions; the diminution of U.S. moral authority to counsel foreign governments against market interventions that can adversely affect U.S. businesses competing abroad, and; the corrosive impact on America’s institutions of the illegal diversion of TARP funds to achieve politically desirable outcomes.

Let’s make the auto bailout a campaign issue and see if we can’t reconcile all of its costs.

Paul Rubio was on and saying how we need to save Medicare. This is a good strategy turning the debate around right into the faces of the pandering party.

The seniors don't seem to get it. The ones who voted in NY for the Democrat. They fell hook line and sinker for the Dem charge that their medicare is in danger. Well it is - if we do nothing to change it.

GM is saying more than 205,000, but that is in every major region of the world. For US employment, this is the formula: take the total number of people on their healthcare expense roll and divide that by 10 to get the number of people who actually work.

The argument of that side is that they are also saving the jobs of all the supporting industry subcontractors, the guys that make the connectors for the radio and the intermittent wiper people, and the sandwich makers in and around the factories. The argument goes that all these people will never again work and that GM car buyers will never again buy cars if the nameplate on this one company is ever allowed to change. Try refuting that - to people who refuse to use logic or history as a guide. I wonder if all the people who manufactured 8 track tape players have been unemployed ever since the rise of the compact cassette.

I like your logic though. A similar exercise was done by the opponents of wasteful light rail being built in the twin cities. They calculated that for each projected rider that doesn't have a vehicle available for the commute, taxpayers could instead lease them a new Lexus at a substantially lower cost.

General Motors filed for Chapter 11 bankruptcy on July 1, 2009. Before filing for bankruptcy, GM employs 91,000 employees in the United States. After the reorganization, General Motors trimmed down its employee base to 68,500 people. It also closed down some of its manufacturing plants and car dealerships due to economic conditions.

Taking the mid-way point between the$5B and the $15B, i.e. $10B and dividing that by 68,500 I am coming up with about $146,000 per job saved.

This is a veritable bargain comparted to the 3,000,000 jobs BO claims to have saved ( an unfalsifiable number if ever there were one!) with $600,000,000 in stimulus spending, which works out to $200,000 per job saved.

I don't necessarily agree with bailouts and I'm not sure how many jobs were saved, but it was a lot more than 68,500.

It isn't just the employees of GM. Think of all the 100,000's of suppliers and downstream people whose jobs were saved, from parts suppliers to caterers, to janitorial cleaning, etc. Further, think of all the small shop owners in the area whose business is dependent upon GM and GM's employees.

I remember being in Seattle when Boeing was headquartered there and did manufacturing there. When Boing's business was slow, the town almost shut down, 10,000s of non Boeing people were unemployed, lot's of places closed, etc. And when Boeing received a big order, business picked up for everyone.

Forgive me, but the whole construct of your answer assumes that these jobs would have been vaporized altogether which misses the fundamental point that if GM had been reorganized under bankruptcy that management, the unions, creditors, and stockholders (I think I have the order correct there, but do not swear to it) would each take a haircut according to the determination of the bankruptcy judge.

The simple fact is that BO and the Dems simply bypassed the well-established legal procedures already in place of our bankruptcy laws so as to benefit their union friends, (and fcuk over the secured creditors) and get government people put on the Board of Directors. So much for the rule of law!

Of course my little calculation does the same thing in a sense, but it assumed (error mine it would appear given your post ) that this was understood in order to make the tongue-in-cheek point of pointing out how stupid and deranged the whole thing was even if we were to accept BO and the Dems pretense that GM would have simply dissappeared off the face of the earth, that no other company would have expanded to fill in the purported void, and that a $10B loss was/is a "success".

I would hope we can have a Republican candidate blow away Obama on this topic in a debate with exactly your perfect pointers.

If one really wants to win independents IMHO this is one perfect example that falls into my oft stated theme of fairness *for all*. A system that benefits and works the same (as best as possible) for everyone no matter their economic class, their political connections, celebrity status, as well as the political correct race, religion, sexual orientation.

No special deals for insiders, Wall Streeters, hedge funds, union bosses, as well as those on the lower ends of the government dole/corruption/free loader spectrum.

I still haven't noticed any Repubs or Tea partiers for that matter highlighting such a theme.

Recently Spitzer had someone on, I can't recall, and asked him what new can any of the Republican candidates offer to Americans except the same theme of "consitution", "smaller governemnt", etc. He is right that this theme is getting old and already, by itself, may have run its course.

If we haven't seen independents rushing to the right by now they are on hold because they do not really accept the Repub positions as already are out there. We can see how they will rush back to the Bamster on a dime of good news. The message must be modified as I have suggested. I think Crafty's points about the auto industry are perfect in this modified theme. I do think many independents are probably annoyed about big auto/ union bailouts. Why them? Why not the independent voters?

Also why do the bankers and wall street get off scot free? What about those government mortgages? What about those people getting special favors from the bottom up?

People do not want the Bama again. But they have not heard from the Repubs an alternative that hits their fancy. (I am talking about the independents not tea partiers or strict Repubs).

That highly overshadows what follows. Some good perhaps came out of it - at the expense of our principles. We can argue over how many jobs were saved or perhaps pushed further down the road and lost later as is more commonly the case. I would prefer to argue over which principles we compromised to achieve some unknown, unmeasurable 'good'.

1) Most obvious is 'equal protection under the law'. Who else was in an equally tough situation and didn't get theirs? Unless you are connected like Gldman Sachs or General Motors, you didn't get yours.

2) As Crafty pointed out, the principle of laws regulating capitalism. There already was an orderly process for doing this, bankruptcy, reorganization, or sometimes just the threat of bankruptcy and reorganization is enough to renegotiate debts instead of lose them entirely. A new buyer might have made an honest go of it after some of the unbearable burdens were lifted, actually saving jobs instead of pushing issues down the road.

3) The constitution. Where did it authorize the government to participate in interstate commerce. So far we only found the clause authorizing it to regulate it.

If I rob the local bank and use the money for a reasonably good cause like paying for my daughter's expenses, am I a thief or a loving father? In that situation the main focus would be on the thievery. At sentencing someone can say what great intentions I had.-------------"I remember being in Seattle when Boeing was headquartered there and did manufacturing there. When Boing's business was slow, the town almost shut down, 10,000s of non Boeing people were unemployed, lot's of places closed, etc. And when Boeing received a big order, business picked up for everyone."

One town too dependent on one employer is not a good thing, Again, does that make it right to trample on all founding or current legal principles? Not in my opinion.

A forest fire is a horrible thing, but part of clearing out dead wood and re-growing a forest. Those who reject bankruptcy, reject capitalism, in my opinion. In the case of Obama, it is more a case of just hating capitalism before learning or knowing about it. He has never to my knowledge read a book about capitalism that didn't oppose it.